PhD Program in Sociology and Methodology of Social Research

University of Milan & University of Turin

29th Cycle

Academic Year: 2016-17

Development for Whom? Neoliberalism, Microcredit and Women

in Bangladesh

By

Md. Al-Amin

Supervisor

Professor Paola Alessandra Rebughini

&

Co-supervisor

Professor Matilde Adduci

PhD Coordinator: Professor Mario Cardano

Graduate School in Social and Political Sciences

University of Milan

Milan, Italy

1

Development for Whom? Neoliberalism, Microcredit and Women

in Bangladesh

Dissertation submitted to the Department of Social and Political Sciences in partial

fulfillment of the requirements for the degree of Doctor of Philosophy in Sociology

and Methodology of Social Research

By

Md. Al-Amin

Supervisor

Professor Paola Alessandra Rebughini, PhD

Graduate School in Social and Political Sciences

University of Milan, Italy

&

Co-supervisor

Professor Matilde Adduci, PhD

Department of Cultures, Politics and Society

University of Turin, Italy.

Milan, Italy

2

ABSTRACT

This study investigates the following questions: How do microcredit programs contribute to the

formation of social capital, poverty alleviation, and empowerment of women in market rationality?

What particular kinds of norms and values do microcredit programs nurture through the operation and

management of credit? How do microcredit programs maximize the recovery of loans from the poor

clients? How and under what contexts do rural women get involved in microcredit programs, and how

do they negotiate the changes to traditions and values in coping with these interventions? Following the

ethnographic research approach, this study explores these fundamental questions by employing in-depth

interviews, case studies, and direct observations as data collection tools. The Foucaultian notions of

disciplinary technologies (Foucault, 1977a) and governmentality (1991) have been applied as a

theoretical framework to analyze the policies and strategies of microcredit programs of Grameen Bank

and BRAC—two leading NGOs in Bangladesh—against the background of neoliberalism.

This study reveals that Grameen Bank and BRAC offer credit by getting poor client women to form

self-selected groups, which is a governmental strategy to reduce the transaction cost. Moreover,

microcredit programs have reinforced the existing social relationships and utilized the social capital

generated by the poor women themselves in order to check the moral hazards of the clients. The loan

delivery and operational mechanism appears to have reinforced the existing social inequality along class

and gendered lines rather than bridging the gap through the productive management of credit. It is also

evident that microcredit programs have disciplined poor clients through the imposition of stringent rules

and regulations, which subordinate them to the NGO mandates – in which processes groups, deposit

books, and permanent residents act as surveillance for the timely repayment of loan from the poor

clients. It also indicates that discipline is more effective on women than men, given the social and

cultural contexts of the poor women in rural Bangladesh.

Microcredit has even reached untapped rural areas, where NGOs have come to compete between

themselves with their ‘home service’ loan, hoping to cash-in on the poverty of poor women. Thus, the

commercialization of microcredit programs reflects the stark reality of the social context in rural

Bangladesh due to longstanding poverty and a lack of organizations offering financial services to the

poor without the so-called collateral free concept. As a result, the commercial nature of the programs

has failed to function as an effective empowering mechanism for women, and has also failed to

challenge the patriarchal social structure. Furthermore, microcredit programs appear to have no

significant effect in elevating women’s social, economic and political agency to a level that could be

effective for improving the intra-household gender relations and raising their status in the community

and in broader society. Rather, the conjugal bliss has turned into conflicting relations due to repayment

pressure.

Moreover, most of the women belonging to different income groups are found to have not used credit

money in productive activities. Therefore, misallocation of credit appears to have been detrimental to

the alleviation of poverty of the clients. The only positive effects have been found in the smoothing of

consumption for some groups in the upper- and middle- income poor. Credit is found to have been

effective in addition to the existing asset base as well as investing credit in income generation projects.

It is therefore debt-burden and risk that binds the clients into a vicious loan-and-repayment cycle rather

than alleviating their poverty. However, microcredit has been a political strategy of neoliberal

governmentality that subordinates poor women into NGO discipline and fosters the global agenda of

neoliberalism at the grassroots level in Bangladesh by ensnaring poor women into formal credit

practices through their entry into financial market.

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ACKNOWLEDGEMENTS

At the very outset, I would like to express my deepest gratitude to Almighty Allah who has

enabled me to accomplish this work within the stipulated time frame. Truly, a good number of

people have directly and indirectly contributed to this work through their intellectual assistance,

mental support and inspiration, and thereby have bound me in their gratefulness. The major

contributions were made by my supervisors whose erudite comments and scholastic opinions

were instrumental in taking my work to a remarkable height. I am therefore profoundly

indebted to my supervisors, Professor Paola Alessandra Rebughini, Graduate School in Social

and Political Sciences, University of Milan, Italy and Professor Matilde Adduci, Department

of Cultures, Politics and Society, University of Turin, Italy. At the same time, I take the

opportunity to express my cordial thanks to my temporary supervisors, Professor Luisa Maria

Leonini, and Professor Roberta Sassatelli, Department of Political and Social Sciences,

University of Milan, Italy for supervising me in the earlier stage of my work, which has given

me an impetus and insight to refine and restructure the primary process of my undertaking. I

also would like to convey my heartfelt thanks and gratitude to Professor Mario Cardano,

Director, Department of Social and Political Sciences, University of Milan, Italy and Vice

Director Professor Mauro Barisione for their sincerest cooperation in all regards from the

beginning to the end of the program. I also would like to express my utmost gratitude to the

University of Milan for offering me an opportunity to pursue my PhD with full scholarship.

Moreover, I will never be able to return the debt to my beloved mother who inspired me

throughout her life to pursue higher studies and gave me her deep affection, peerless love,

dedication, care, and sacrificed her entire life for the cause of my wellbeing. Therefore, all of

my deepest felling of love and sincere gratitude is due for my mother who left this earth during

my PhD program. I do not know whether it would have been possible for me to pursue my

degree without sincere and unconditional cooperation of my wife Kazi Fatima-Tuz-Zohora

who sacrificed for me an important portion of her lifetime to accomplish this work. My candid

thanks and kudos go to my father figure Professor Quamrul Ahsan Chowdhury, Department of

Sociology, University of Dhaka, Bangladesh who always inspired me to pursue PhD and keep

myself engrossed in academic research and studies. My Master’s Supervisor Professor Johan

Batiaensen, University of Antwerp, Belgium, and Professor Golam Mathbor, Monmouth

University, New Jersey, United States of America have also bound me in their gratitude for

their scholarly opinions on the preliminary version of the research proposal. Moreover, I am

deeply indebted to my colleague Dr. Mohammad Jasim Uddin, Professor, Department of

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Sociology, Shahjalal University of Science and Technology, Sylhet, Bangladesh, for his candid

advice and astute suggestions on my work at the proposal level. I am profoundly grateful to my

friend Dr. Md. Nazrul Islam, Associate Professor, Department of Political studies, Shahjalal

University of Science and Technology, Sylhet, Bangladesh for lending me his intellectual

support and assistance for my work. My sincere appreciation also goes out to my elder brother

Muhammad Lutfor Rahman Khan and my intimate friends Hasanat Jahan Bithi and Md.

Shahidul Islam for giving me mental courage, appreciations and encouragement.

My deepest gratitude is reserved for Farzana Naz Shampa who always gave me her best wishes

and advice regarding my academic career. Furthermore, I am deeply indebted to my

respondents who gave me their unconditional support and the relevant pieces of information

necessary for my work, without which this work would not come to fruition. My research

assistants who candidly contributed to my work throughout the data collection processes and

dedicated their valuable time to elicit information from the respondents also deserve my

gratitude. Likewise, I would like to express my special thanks to the local managers of both

Grameen Bank and BRAC for giving me an opportunity to work with their clients and tendering

me all-out support from the beginning to the end of my data collection processes. I am very

much grateful to the authority of Shahjalal University of Science and Technology, Bangladesh

for granting me study leave to pursue the expected PhD degree. Finally, I am grateful to a host

of anonymous persons who have contributed to my work in myriad ways with their sincere

cooperation and assistance.

Milan, Italy Md. Al-Amin

July 6, 2017

5

CONTENTS

ABSTRACT .............................................................................................................................. 2

ACKNOWLEDGEMENTS .................................................................................................... 3

List of figures ............................................................................................................................ 8

Introduction .............................................................................................................................. 9

1.1. Background and Statement of the Problem ................................................................................ 9

1.2. NGO Interventions for Women Development in Bangladesh.................................................... 12

1.3. Women in Development and Integration of Microcredit .......................................................... 17

1.4. Research Questions ................................................................................................................... 23

1.5. Rationale of the Study ................................................................................................................ 25

1.6. Structure of the Dissertation ..................................................................................................... 26

Research Design and Methods of Data Collection .............................................................. 28

2.1. Research Design ......................................................................................................................... 28

2.2. Justification for Qualitative Study .............................................................................................. 29

2.3. Site Selection .............................................................................................................................. 30

2.4. Research Participants ................................................................................................................. 33

2.5. Why Grameen Bank and BRAC? ................................................................................................. 34

2.6. Methods of Data Collection ....................................................................................................... 35

2.7. Gaining Access to Respondents ................................................................................................. 38

2.8. To Start with the Data Collection ............................................................................................... 47

2.9. Recruiting Research Assistants .................................................................................................. 51

2.10. Testing the Questionnaire ....................................................................................................... 52

2.11. Data Compilation, Edition and Analysis ................................................................................... 53

2.12. Checking Ethical Issues............................................................................................................. 54

2.13. Limitations of the Study ........................................................................................................... 55

Theoretical Framework ......................................................................................................... 57

3.1. Neoliberalism: An Overview ...................................................................................................... 57

3.2. The Theoretical Approach .......................................................................................................... 62

3.3. Review of Existing Literature ..................................................................................................... 66

Socioeconomic Background and Lending Processes of Microcredit in the Study Area.. 74

4.1. Social Background of Study Area ............................................................................................... 74

4.2. Socioeconomic Profile of Respondents ..................................................................................... 80

4.3. Development Trajectory of Microcredit in Bangladesh ............................................................. 83

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4.4. Microcredit in the Context of Study Area .................................................................................. 85

4.5. Microcredit and Its Lending Processes ...................................................................................... 86

Microcredit and Social Capital Formation: Why and What For? .................................... 92

5.1. Social Capital Theory in Development Discourse ...................................................................... 92

5.2. Microcredit and Social Capital: Drawing the Link ...................................................................... 97

5.3. Construction of Self-selected Group and Delivery of Credit .................................................... 100

5.4. Self-selected Group and Reducing Transaction Costs ............................................................. 104

5.5. Norms, Network, and Trust: How does it Work? ..................................................................... 111

5.5.1. Meeting Norms and Myth of Solidarity ............................................................................ 111

5.5.2. Information Network and Economic Outcomes ............................................................... 113

5.5.3. Credit Relations and Reciprocity of Trust ......................................................................... 114

5.6. Social Capital and Existing Relationships ................................................................................. 117

5.7. Juxtaposing Conflicts and Cooperation .................................................................................... 119

5.8. Social Capital and Reinforcement of Inequality: Does Microcredit Contribute? ..................... 122

Disciplinary Technologies and Maximization of Recovery in Microcredit Programs .. 127

6.1. Coercion and Discipline in Microcredit Programs .................................................................... 127

6.2. Security Deposit and Disciplinary Power ................................................................................. 132

6.3. The Sunset Law: A Summary of the Opinions .......................................................................... 134

6.4. ‘Blood Suckers in the Village’ ................................................................................................... 137

6.5. Women’s Shame and Sense of Prestige as a Form of Discipline ............................................. 138

6.6. Group and Permanent Resident as Surveillance...................................................................... 143

6.7. Savings and Deposit Books as Surveillance and Discipline ...................................................... 147

6.8. Punishing the Poor: Default and Drop Out .............................................................................. 149

Microcredit in Market Rationality and Regulation of Rural Financial Market ........... 153

7.1. Poverty and Regulation of Finance for the Poor ...................................................................... 154

7.2. Financial Market in the Untapped Rural Areas and Conflict of Interest .................................. 155

7.3. Market Rate of Interest and Hidden Charge: Lack of Consciousness? .................................... 159

7.4. Interest against Deposit and Savings: Much Ado about Nothing? .......................................... 163

7.5. Regulating Movement and Consumption Pattern of Clients ................................................... 164

7.6. Governing Clients through Mobile Phone ............................................................................... 165

7.7. Credit Competition in Rural Market and NGO Strategies ........................................................ 167

Agency, Empowerment and Intra-Household Relations: Expanded or Exacerbated? . 170

8.1. Agency, Empowerment, and Perception of Women ............................................................... 171

8.2. Developing Women’s Freedom and Autonomy? ..................................................................... 178

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8.3. Loan Collection and Use: Who Bears the Risk and Responsibility? ......................................... 181

8.4. Microcredit: Bringing Peace or Increasing Stress?................................................................... 185

8.5. Microcredit: A Means for Conflict Resolution or a Bone of Contention? ................................ 187

8.6. Secret Savings and Conflict Negotiation .................................................................................. 191

8.7. Credit as Dowry and Conflict Negotiation ............................................................................... 192

8.8. Encountering Social Barriers and Negotiating the Traditions and Values? ............................. 195

8.9. Empowerment and Economic Rational Women ...................................................................... 199

Poverty and Social Vulnerability of Rural Poor Women ................................................. 202

9.1. Poverty and Vulnerability Nexus .............................................................................................. 202

9.2. Poverty Alleviation and Credit Relations ................................................................................. 207

9.3. Credit as Coping Strategy and the New Economy ................................................................... 208

9.3.1. Emergence of the New Economy: Drawing on Clients’ Views .......................................... 210

9.4. Loan Use and Management: Who supervise? ......................................................................... 216

9.5. Market Saturation and Low Return Investment ...................................................................... 219

9.6. Reduction of Poverty and Vulnerability: Microcredit is a Means? .......................................... 221

9.6.1. Income, Savings and Economic Crisis ................................................................................ 221

9.6.2. Food Insecurity and Coping Strategies ............................................................................. 223

9.6.3. Asset Building .................................................................................................................... 226

9.6.4. Children Education ............................................................................................................ 227

9.6.5. Health Care ....................................................................................................................... 229

9.6.6. Living Condition and Quality of Settlement ...................................................................... 230

Conclusion ............................................................................................................................ 233

Bibliography ......................................................................................................................... 241

Appendix ............................................................................................................................... 275

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List of figures

Figure 1: The map of Bangladesh and greater study area in bold circle. ............................................. 31

Figure 2: The map of the study area indicating in bold circles (edited) ............................................... 32

Figure 3: Education of respondents ...................................................................................................... 81

Figure 4: Occupation of respondents.................................................................................................... 81

Figure 5: Average family size of the respondents ................................................................................. 82

Figure 6: Organizational structure of Grameen Bank, BRAC and Microcredit programs ..................... 90

Figure 7: Loan use received by women .............................................................................................. 181

Figure 8: Who asked you to take loans? ............................................................................................. 184

Figure 9: Loan cycle of credit clients ................................................................................................... 214

Figure 10: Loan use by different income groups ................................................................................ 218

Figure 11: Coping mechanism of credit clients ................................................................................... 226

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CHAPTER 1

Introduction

1.1. Background and Statement of the Problem

Over the last couple of decades, non-governmental organizations (NGOs) are increasingly

becoming recognized as vital actors on the development landscape at the local, national and

international levels. The role of NGOs in development practices is the delivery of basic needs

to the needy and vulnerable sections of society, organize policy advocacy, and campaign for

social change (Lewis and Kanji, 2009). At the same time, NGOs are also actively involved in

addressing a wide range of issues such as poverty alleviation, unemployment, education,

healthcare and the like. They also look for solutions to these problems through different

development intervention programs. Since the 1970s, there has been a remarkable growth of

NGOs in Bangladesh – the total number reached 2,203 in 2014 (as registered by the NGO

Affairs Bureau (NGOAB) (Lewis, 2016).

The operating philosophy of many of these NGOs is that the integration of poor people –

particularly poor rural women – in development is indispensable in order to achieve sustainable

and equitable social development through gender justice. In this connection, they have been

identified as preeminent forms of organization with the capacity to implement the global

commitment to ‘bottom-up’ development (Kamat, 2004) by responding to the needs and

demands of the poorer sections of society (Robinson, 1997; Wood, 1997). The NGOs are

indeed playing a part as development partners of Bangladesh, with Grameen Bank and BRAC

(Bangladesh Rural Advancement Committee) as the most prominent development partners

amongst them. Importantly, microcredit is the most glaring example of development

intervention tool for these players. The landscape of microfinance is therefore dominated by

these NGOs, which accommodates a large number of clients, and also has a global perspective

(Roy, 2010). Microcredit in the developing world is the standard term for financial services

mainly in the forms of lending; saving and insurance provided to low income individuals

without collateral (Mosley & Steel, 2004). Hence, microcredit has been considered as one of

the most effective and favored interventions for poverty alleviation in many developing

countries (Johnson & Rogaly, 1997; Ahmed, 2004; de Aghion & Morduch, 2005; Bateman,

2014) proving in significant ways that it can improve the economic life of the poor segments

of society (Hashemi & Morshed, 1997; Chowdhury & Alam, 1997; Hossain, 1998;; Islam,

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2005). Thus, the NGOs pursue these strategies by creating employment opportunities for

income generation or spurring small-scale enterprises for rural women through the provision

of a small financial loan.

The concept of microcredit is relatively new in the parlance of development – first coming into

prominence in the 1970s – and in the subsequent years has gradually been recognized as the

best way to tackle poverty (Hulme & Arun, 2011). From the 1950s through to the 1970s, the

provisions of financial services by donors or government agencies were mainly in the form of

subsidized rural credit programs. These initiatives were often dogged by high loan defaults,

huge losses, and an inability to reach poor rural households (Khandker, 1998). Since the 1980s,

microfinance has been an important aspect of development policy (Arun & Hulme, 1999;

Dovutoğlu, 2013), which represented a turning point in the history of microfinance in that

Microfinance Institutions (MFIs) such as Grameen Bank, the brain child of Mohammad Yunus,

began to show that they can provide small loans and savings services profitably on a large scale

to the poor, especially poor women living in rural areas. Following this period, the popularity

of microcredit has resulted in a paradigmatic shift in the field of development thinking (Qudrat-

I Elahi & Rahman, 2006) with wider replication of this model in both developed and developing

countries of the world because of its successes in poverty-alleviation in Bangladesh (Wahid,

1994). Thus, microcredit has become a part of global economic policy and drew huge public

attention when this seminal idea of the US graduate Bangladeshi Professor Dr. Mohammad

Yunus was brought into development perspective (Bateman, 2014). Therefore, microcredit as

a new development model has been touted as a key plank of economic and social development

for the twenty-first century (Microcredit Summit, 1998).

Generally, the wider understanding is that NGOs have been in a position to dominate the

microcredit industry, and they are seen as more suitable and reliable than any other institutions

for the purpose of microfinance (Dacheva, 2009; Lewis & Wallace, 2000). Now NGOs have a

greater mandate and role in the distribution of international funds meant for poverty alleviation

in developing countries (Qudrat-I Elahi & Rahman, 2006). Thus, the microcredit model became

an international development policy for the governments of donor countries from the 1980s

onwards. Resources and technical support began shifting to establishing and expanding

microfinance (MCIs) institutions and microcredit programs, and hence large amount of

commercial investments began to pour into the microcredit sector (Bateman, 2014). Grameen

model in this regard was very popular and endorsed by most of the mainstream development

agencies (Rankin, 2002). Many NGOs offer microcredit programs, specifically targeting

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women on the basis that they are more likely to encounter obstacles in accessing credit, have

limited opportunity in the wage labor market, and have power imbalance in household

decision-making (Pitt et al., 2003; Swain and Wallentine, 2007). Microcredit in this regard

provided without any collateral is supposed to be much more convenient for the clients. Thus,

people having no access to formal commercial banks (McDermott, 2001; Mallick, 2011;

Mazumder & Wencong, 2013) are more likely to opt for microcredit in order to escape poverty

by floating small scale business enterprises for income generation, thereby bringing women

out of the family precinct and into the public domain of markets. NGOs in this connection

situate themselves in a vital position synchronizing their interests to the purpose of the poor by

offering credit services with specific terms and conditions.

While the success history of microcredit programs of NGOs like Grameen Bank and BRAC is

widely recognized and accepted, they are also, in the same vein shrouded by the controversies.

There are arguments both for and against the performance of Grameen-style microcredit

programs for poverty alleviation and empowerment of women in the context of Bangladesh.

Also, whether microcredit programs have yielded any remarkable outcomes for the households

of the poor women in rural Bangladesh remains a moot question, given the fact that microcredit

has produced mixed outcomes about the programmatic success. While a large body of studies

express greater optimism about the effects of microcredit on the life-chances of the poor women

(Wahid, 1994; Hashemi et al., 1996; Amin et al., 1998; Khandker, 1998; Pitt & Khandker,

1998; Zaman, 2000, Khandker, 2001; Kabeer, 2001; Khandker, 2003; Khandaker, 2005;

Mazumder & Wencong, 2013), a considerable number of studies end up with pessimistic

outcomes (Goetz & Gupta, 1996; Schuler et al., 1996; Rahman, 1999; Karim, 2008; Karim,

2011; Jahiruddin, et al., 2011; Uddin, 2013). Moreover, the existing evidence base indicates

that Grameen Bank boasts about 98 percent loan recovery (Wahid, 1994; Dowla, 2006; Karim,

2008), which is certainly a key issue, and therefore, calls for an investigation into how it has

been effective and successful. Similarly, how poor clients are obliged to comply with the rules

and regulations of the microcredit programs is also considered an important theme for

exploration. In addition, which groups of women NGOs prefer to include in their programs

also demands further critical analysis. In the same manner, whether microcredit programs

distribute the benefits to the poor clients along class and gender line is deemed a necessary

developmental concern for calling attention to the public. Likewise, whether microcredit

programs nurture any particular norms through the operation and management of microcredit

also demands investigation. These are the relevant issues that require careful investigation.

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Besides, it is also generally understood that Bangladesh is staunchly a patriarchal society,

which observes and is bounded by traditional norms and values. Given these circumstances, it

is indeed a vital issue to know if microcredit could provide an effective developmental impetus

to inspire poor rural women to challenge the patriarchal social structure and traditional norms

and values of the society.

1.2. NGO Interventions for Women Development in Bangladesh

In the South Asian region, Bangladesh is said to be one of the more gender sensitive countries.

The gendered attitude of people has been developed though the sex role socialization processes,

which is also diffused through other cultural practices observed in the family and the broader

society. While gender norms are broadly reinforced culturally and institutionally, it is within

the family that children learn about the gender roles in the first place, equating power and

authority with maleness, and femaleness with inferiority and subservience (Ram et al., 2014).

Consequently, gender socialization entails learning how to develop behavior consisted with

one’s gender. Boys learn to exercise power and authority over girls, and girls learn about how

to surrender (Ram et al., 2014). Socially constructed norms also reinforce gender segregation,

gender discrimination, and gender inequality in every sphere of life, which is a commonplace

phenomenon, reflected in different activities in the society, beginning after the birth of a child.

Aside from being branded as a highly sex-differentiated society, Bangladesh has also been

described as maintaining a staunchly patriarchal disposition, in addition to being a class society

(Cain et al., 1979; see Balk, 1996). Patriarchy is a system of social relationships manifested in

the forms of men’s control over women. It interacts with economic class to produce an acutely

gendered division-of-labor, a stiffly segregated labor market with an imbalance to gender-

access, and a sheer system of social differentiation placing women at social and economic risks

(Cain, et al., 1979). The most crucial aspects of their lives -freedom of choice, decision-making

power, and access to resources are controlled by the norms of the patriarchal system (Sebstad

and Cohen 2002). Patriarchy functions at the psychological level of individuals, and then

penetrates into the social body through its cultural and institutional day-to-day practices. It is a

practice, culture, ideology, manifestations of maleness in action, and a learned behavior of

dominance over women that all come to pass in the arena of social relationships. In this process

men retain the power and control over household resources, while women remain dependent

on them (Mizan, 1994). Indeed, patriarchal institutions and the social relations it (re)produces

are largely responsible for the secondary status of women (Sultana, 2011). They are dependent

13

on men at different cycles of their lives – from fathers through husbands to sons (Baden, et. al,

1994). Women are fortified in this invisible margin of the social system, reinforced by the

process of social interactions taking place in a particular setting. Because, there is a radical

dissymmetry between men and women (Bourdieu, 2001), and women are therefore excluded

from the games of the men, placing them in a critical or liminal position (Bourdieu, 2001).

Besides, women are also unwitting victims of symbolic violence related to the various modes

of social and cultural domination (Udasmoro, 2013), which is practiced by people in different

forms in everyday life (Bourdieu, 1998, cited in Udasmoro, 2013). Different social, economic

and political backgrounds give women subordinate status in society through the imbalance of

power.

Women’s gender-roles are sharply divided. Division of labor is gender based (Zaman, 1995).

Mobility in the public domain is restricted. Traditionally, in the rural areas, men usually work

in the field or move freely outside the home, while women are most often confined to the

periphery of home. This means that women’s employment opportunity beyond the boundary

of home is very limited (Baden, et al. 1994). Women’s space is traditionally restricted by the

boundary of bari1 in the context of Bangladesh (Fraser, 2010). Men’s decision-making in all

familial matters is considered to be pivotal, whereas women’s direct role in major household

decision-making is typically deemed peripheral and ignored. Women are dependent on the

male members of their families for all financial and other material and nonmaterial support.

Primarily, the lack of economic power of women makes them dependent on their husbands or

other male members of the family. Gender segregation manifested in the forms of employment,

education, distribution of resources, and decision-making authority prevails in every sphere of

life experienced by women. Women’s contribution to family welfare in the kind of unpaid

labor, child and elderly care, and other economic and noneconomic activities are not recognized

as appreciable work, unlike those of their male counterparts. There are strong norms that

actively discourage women from seeking work beyond the home (Amin, 1995). In many cases,

women cannot even freely move outside their homes because of traditional purdah2 system,

which literally means curtain or vein but is used figuratively to mean the veiled seclusion of

1 It is a structure of one or more houses with natural setting where people live in the same boundary. A bari

represents the residential place of people with emotional attachment which provides a homely atmosphere and

also signifies the economic and political center at local form. Sometimes a bari consists of one house or most

often of many houses given the number of kinship members. 2 The term ‘purdha’ stands for the seclusion of women from public place as well as covering or veiling ones face

so that other male members of society cannot see their face other than their immediate family members or relations

with whom they are allowed to make their face without curtain. This practice of purdah isolates women from the

mainstream of open social space.

14

women (Chen, 1986). Therefore, purdah restricts women from being in the public male sphere

of economic, social and political life (Chen, 1986). Purdah has primarily operated as a means

for the social control of women (Feldman and McCarthy, 1983), and is also considered a social

means to control women’s’ sexual power and morality (Mernissi, 1975). Traditionally, purdah

system “exists as a means of retaining and prohibiting the participation of woman in visible

social roles, while simultaneously ensuring their participation in fulfilling the essential

productive activities in the households” (Feldman & McCarthy, 1983: 951). These norms

restrain women’s involvement in market transactions, and thus holds back their potential to

generate an income base, reinforcing their economic dependency (Hashemi, et at., 1996).

Therefore, lower economic conditions, rigid cultural norms, sexual segregation, and the

structures of purdah have jointly contributed to exclude women from the most important

sources of wage employment and income generation activities, including the cultivation of

their own land (Cain, 1978). As a result, they have become the inhabitants of a home-space

that has been detached from the mainstream of society, thereby dwindling away the possibility

of developing capacity to advance their lives. Thus they have to very naturally depend on their

husbands or other male members of the family against the backdrop of this social and economic

situation. Given the social context of Bangladesh, men have greater power and authority simply

by virtue of being men, and, therefore, the head of the family (Schuler et al., 1996).

With a population of about 161 million (WB, 2015), Bangladesh is predominantly a Muslim

country (approximately 85% percent of the population), with 12% being Hindu, and the rest

being followers of Christianity and other religions (Vaughan, et al., 2000). Almost 69% of the

population live in the rural areas (WB, 2014), and are likely to be engaged in the agricultural

sector (Davis, 2001). A significant number of the rural population is afflicted by endemic

poverty and lives below the poverty line, and of them women are regarded as the poorest of the

poor (Begum, et al. 2011) due to lack of access to social opportunities, freedom of employment

and mobility to be in the public places for the sake of sustaining their lives. Consequently, a

considerable number of women are excluded from exercising their equal rights as citizens

compared to their male counterparts in the areas of education, employment, better livelihood

options and so on. Although women comprise almost half of the population (Begum, et al.,

2011; Kalam, 2014), they are often discounted by development policy planners as active agents

of social change and vehicles of development due to gender-centric development perspectives.

Women’s involvement in development activities and their contributions to society is repeatedly

emphasized in many development literatures, and is indeed key to the harmonious management

15

of social and economic relations. Women’s integration in development is therefore

unquestionably important for a better and prosperous society free of gender discrimination,

injustice and inequality if Bangladesh is to achieve the coveted development goals of the

nation. If a large section of the population is left out from active participation in social

development programs, equitable expansion of society is likely to be impossible to achieve,

which is cause of concern for policy-development planners.

Although there has been remarkable progress in some socioeconomic indicators, poverty

remains pervasive in Bangladesh (Parveen, 2009). According to World Fact Book (2008, cited

in Parveen, 2009), approximately 40% of the population still lives below the poverty line. The

plight and poverty of the people is much more acute in the rural areas in Bangladesh where

women are the greatest victims, and remain trapped in cyclical poverty (ADB, 2004). Men are

the traditional breadwinners of the family, while women are deemed socially backward and are

considered to be a burden to the family due to their economic dependence on their male

counterparts (Parveen, 2007). Male attitude towards women’s role in the family and society is

likely to exacerbate the plight of women and puts them in an even more deplorable

predicament. Rural people have distinct features construed by their attitude, life style, culture,

norms and values, and other social and cultural practices. Socially constructed ideas thus shape

the behavior and thought of people, differentiating between male and female, which determines

their subsequent roles in the society, and, therefore, structures their actions accordingly. Rural

society is also particularly characterized by “severe” masculinity, which in this case hinders

the ability of women to practice their life choices. In many situations, it also happens that this

gendered attitude typical of rural societies do not encourage them to countenance the female

members of the family to work for income earning activities, which would ordinarily contribute

to the wellbeing of the family and children. Moreover, women’s triple role3 (Moser, 1993) in

a society is the most critical aspect of their life to make free choices, which confines them to

the narrow space of the family and restricts their opportunities.

Furthermore, women’s agency (Sen, 1999; Kabeer, 1999) is poorly developed in the sense that

the social system restricts the scope for them to practice and actualize their economic, political

and cultural agencies, which by all accounts could enable them to strengthen their position to

contribute to society in general and the family in particular. The culture, social norms and

3 Women perform three types of work as players in the households-reproductive, productive and community

managing (Moser, 1993).

16

values, and any other practices of this kind coalesce together to develop their outlook towards

life in a way that women are not considered a valuable agent of social change, a domain that is

typically reserved for their male counterparts. As a result, they risk losing their self-respect,

self-confidence, and self-development, in-spite of the fact that they possess the capacity to

understand and chart their own autonomous future. Besides, cultural practices and social beliefs

are among other things either bars or catalysts to social development so far as women’s role in

development is concerned. Cohen (2006) argues that societal beliefs continue to hinder the

progress of women’s empowerment in many parts of the developing world. Bangladesh in this

respect is no different. While women’s integration in any development work and their

contributions to family and society in any rate is a crying need for an equitable, just and

distributive society, the reverse reality is that Bangladesh fails to present the expected picture

for this. Likewise, the level of consciousness of women, education, skills and other

competences having in their credit do not suffice to make their efforts successful and countable

in any way. In this regard, until extraneous steps are taken to improve the plight of women

through education and income generation programs, a progressive and prosperous Bangladesh

free of discrimination is unlikely to be achieved. Against this backdrop, government programs

and nongovernmental organizations are pivotal in advancing women’s social status and raising

their consciousness to an optimum level in order to increase their life chances.

Following the emergence of Bangladesh as a substantive state in 1971, it came to be known as

the most contested ‘test case of development’. The country inherited a war ravaged economy

(Islam & Morgan, 2011), and therefore could not afford to feed her population due to the lack

of food availability. Shortly after in 1974, the country experienced famine, leaving a large

number of population in the penury of poverty (Sen, 1981; Sen, 1999). During this period, a

number of NGOs emerged to confront the challenges (Zaman, 2004), offering emergency

service delivery programs with the intention of alleviating the poverty and starvation. The

NGOs were therefore the front-line actors providing assistance and other auxiliary support

services to the poor people in order to improve their material conditions and make changes in

their lives through integrating the poor people – particularly the rural poor women – in order

that they become the beneficiaries of development. In subsequent periods, NGOs have made

strides in the social development sectors of Bangladesh by providing their services to the

neediest people. Therefore, the development context of NGOs in Bangladesh is related to the

country’s socioeconomic, cultural and political conditions (Islam and Morgan, 2011).

17

Most of the institutions working for development have stated objectives in common: to

establish equal opportunities and to empower women for a better and progressive society. NGO

activities have therefore become an indispensable part of Bangladesh for its leading role in

bringing about a change in socioeconomic sectors in the last three decades. Historically, most

of the NGOs started activities shortly after the liberation war through organizing relief and

rehabilitation services for war victims (Lewis, 1997; Zohir, 2004; Davis, 2006; see Hassan,

2015). When the crisis period was over, leaders of these development organizations realized

that people needed long-term assistance to move away from ‘relief dependency’ and instead to

more ‘self-reliant development.’ Since poverty is a major concern for development and is

perceived to be the root cause for the propagation of other concomitant crises in Bangladesh,

the majority of the developmental intervention programs were primarily focused on poverty

alleviation. Most of the existing NGOs work on two basic missions: to alleviate poverty and

empower the poor, specifically women (Lovel, 1996). During the 1980s and with funding from

foreign funding agencies, microcredit based projects aimed at expanding their activities in

different areas of development became the focal point of NGO missions, a trend which has

continued to this current day. Moreover, multilateral positions on gender and development

(GAD) for the most part stress the poverty of women as the primary justification for

development interventions designed to improve their position in society (Jackson, 1998). Thus

NGO activities have both been more pervasive and popular for providing services to the door-

step of poor families. It is commonly accepted that when government organizations fail to

supply necessary services to the poor, NGOs can intervene to provide proper services with

them. Therefore, much of the development activities aiming at the poor have largely been the

responsibility of NGOs, oftentimes even eclipsing the performance of government-led poverty-

relief organizations. Given this social context and drawing from the microcredit initiatives of

Grameen Bank, a majority of the NGOs are now seen focusing on microcredit programs

designed for poverty alleviation and the empowerment of women by incorporating them into

these programs, mostly in rural areas in Bangladesh. As a result, microcredit has rapidly

become a part of almost every social development NGO (Ahmed, 2004).

1.3. Women in Development and Integration of Microcredit

The practice of directing developmental interventions to low-income women in the Third

World gained impetus in the early 1970s when the United Nations underscored the need to

integrate women on issues of economic development and designated 1975 as International

Women’s Year (Koczberski, 1998) in order to increase women’s economic participation in

18

development (Buvinic, 1986). Since the 1970s, gender-related issues gained massive

prominence in the development literature (Arku & Arku, 2009), given women’s lower status

and power relative to men in economic, political and occupational prestige (Nikkhah, et al.,

2012). The concept of women’s development therefore has now become an essential part of

the development discourses and policy initiatives (Vijayamahanan et al., 2009).

While the developmental intervention programs initiated by richer Western countries have

brought positive impacts in certain vital development sectors, particularly in the areas of

economic growth, life expectancy, maternal mortality and literacy rate, but have failed to

provide the benefits of such human development programs to the poor at the grassroots level

(Korten, 1990; Chambers, 1986). Indeed, the process of allocating support services to the poor

have been problematized by practitioners, particularly if the benefits of such programs are only

distributed along gendered lines (Rahman, 1998), or if they fail to take into the account the

degree of need and urgency of the recipients. Serious attention should be given to design and

implement a policy that sustainably alleviates poverty and empowers the poor, offering them

broad opportunities to build up a capacity to uplift their own life predicated upon a respect for

gender equality. Promoting gender equality is therefore an important part of a developmental

strategy that seeks to enable all women and men to escape poverty and improve their standard

of living (World Bank, 2001a).

In many developing countries of the world, women in poorer socioeconomic classes are

generally seen to be systematically marginalized due to cultural and other institutional practices

that prevent them from getting access to productive economic sectors and other income earning

opportunities, resulting in them becoming socially excluded. In this context, women need to be

integrated into developmental processes as active agents for achieving effective development

(Reeves & Baden, 2000). From the developmental perspective, a goal-oriented gender-based

policy is considered to be essentially for the alleviation of poverty in general and for poor

women in particular, given their relatively vulnerable position in the society. In this respect,

the World Bank played a leading role in support of bringing women into the mainstream of

economic policy by arguing that focusing on women helps to raise returns on investment and

improves the balance of payment (Women2000, 1992), and also “investing in women is central

to sustainable development” (ADB, 2003:30). Therefore, for the World Bank, gender concerns

are justified with reference to economic growth and poverty reduction (Jackson, 1998).

19

Moreover, multilateral development agencies of the world espouse equitable social

development for a better and just society free of poverty, misery and injustice towards women.

Different development organizations, like the World Bank, have their own research, evaluation

and management department that have made efforts to document and champion the

achievements of various developmental programs offered for the improvement of the poor, and

who disseminate the findings for the intellectual consumptions of scholars (Rahman, 1998).

The outcomes of their efforts in many cases proved to be controversial (Rahman, 1998). Many

gender-issues are depicted in development literatures, which accentuate further dynamic and

effective interventions to better achieve the goal that offers a space for academic and

intellectual practices, giving rise to different opinions and views expressed in the forms of

theories, development models, strategies, and plans.

One of the developmental policy prescriptions was in the form of a modernization paradigm,

which advocates economic progress by reducing certain development barriers through

modernization, such as industrialization (e.g. Rostow, 1960). The proponents of modernization

theories suggest that modernization has normative characteristics and intrinsic forces to liberate

human being from economic hardship, social and cultural stigma, labor inflexibility,

employment constraints, and thus build the base of an egalitarian society. This is less possible

in a traditional society, which is typically male-dominated and authoritarian (Jaquette, 1982).

Scholars have divided opinions about the outcomes of modernization and the possibilities for

its soothing effects to percolate directly to the people. Thus standard liberal theory sees women

and development as part of an inclusive process of modernization (Jaquette, 1982).

Conventional liberal assumptions of development had been under thoroughgoing attack when

Ester Boserup’s resounding work Women’s Role in Economic Development published in 1970.

In her resounding book, she presents an argument against modernization with plausible

explanations vis-à-vis the link between modernization and women’s advancement. According

to her, modernization shrinks the opportunities for women instead of liberating them in some

important sectors, which once was widely accessible to them. Buserup again points out that

although some aspects of modernization has positively contributed to the development of

women, other aspects of the process are in fact detrimental to women by creating jobs in the

informal sector, replacing most of the work in the rural farmed based production (Jaquette,

1982). She further maintains that by dismissing women’s contributions, many development

projects deprived women of economic opportunities and status rather than improving the life

of women in the Third World (Buserup, 1982). Routinely, the World Bank in its study in 2001

20

Engendering Development recognized equality between male and female as an important

development objective and considered it a core development issue (World Bank, 2001b).

Besides, both economic development planners and feminist development thinkers understand

the situation of women in developing societies through the paradigm that advocates for greater

efforts to integrate women into their development plans, known as the ‘woman in

development’(WID) approach (Koczberski, 1998; Singh, 2007).

During the past two decades, the loosely-used term ‘women in development’ has become a

common development catchword both inside and outside academic arenas. WID is understood

as a route to the integration of women into global processes of economic, political and social

development and change (Rathgeber, 1990). The publication of Ester Buserup’s seminal work

Women’s Role in Economic Development triggered huge academic debate on the issue of

women in development. In one of the chapters on the Society for International Development,

the Women’s Committee of Washington, D.C, primarily used the term WID. The intention

behind this initiative was to bring the issue raised by Buserup in her widely celebrated book

into policy discussion and debate. Later, American scholars brought the oft-quoted concept

into common currency, and advocated for the greater emancipation of women through

integrating them into the economic system and policy consideration. The primary emphasis

was laid on the development of strategies and action programs aimed at reducing the drawbacks

experienced by women in the dynamic productive sector, and thereby ending all kinds of

discrimination against them (Rathgeber, 1990). The WID perspective was, however, closely

linked with the modernization paradigm that dominated mainstream thinking on international

development from the 1950s into the 1970s. During that period, conventional wisdom stated

that modernization would improve the standard of living in developing countries benefiting all

segments of the society through the so-called “trickle down processes” (Rathgeber, 1990). But

the modernization paradigm encountered scathing criticism due to its beneficial effects going

to the rich, rather than to the poor. Modernization approaches also pay scant attention to the

social and political impacts of economic growth to the poor, and has largely failed to bring

about tangible benefits in countries that are already mired in poverty (Koczberski, 1998).

Besides, the early 1970s first witnessed the emergence of a new concept in the development

parlance in the USA. Development practitioners and researchers noticed that women’s

representation in the aid agencies was marginal, and that there was reluctance by aid agencies

to recognize Third World women in their aid programs. They argue that the aid programs of

major institutions such as United States Agency for International Development (USAID), The

21

UN, the Food and Agriculture Organization (FAO), and the World Bank were male-biased,

resulting in women being ignored by the development process (Koczberski,1998). In a reaction

to this policy disadvantaging women or ignoring their participation in economic development

process, the WID approach came into a development discourse.

The women in development theory (WID) focused on the provision of more power to women

by bringing about a change in the institutional frame of laws to ensure the incorporation of

women into national economies for achieving and advancing a better and equitable society

(Tinker, 1990; Rathgeber, 1990). WID approach provided opportunities for women to partake

in formal sector jobs and in social, political and economic spheres of society, thereby

contributing to the national development (Rathegeber, 1990). Women in development (WID)

paradigm put accent on the inclusion of women in development projects, enabling women to

have a fair opportunity at being integrated into economic development like their male

counterparts in the family and in the society (Tinker, 1990). This developmental approach is

grounded on the premise that females are also equal shareholders of economic and social

development, and therefore to ignore their important role in society will be severely detrimental

to the development of a rational society free from discrimination and prejudice. Many feminist

thinkers have challenged the WID approach on the grounds that these development paradigms

do not address the issue of inequality between male and female, the domination of male over

women, and their subordinate position in the social structure (Mies, 2014). Women who are

involved in economic activities and gainful employment naturally enjoy relatively higher social

status and more social advantages compared to women who have been unable to access such

domains of activity. Such an argument strengthens the claim for greater economic integration

for women, and for their access to credit with flexible terms. Indeed, women’s limited access

to credit facilities is increasingly becoming recognized as one of the major constraints to

development in much of the Third World. As a result, credit appeared and became the

“common missing piece” in women and development (McKee, 1989, cited in Rahman,

1998:21).

On the other hand, another approach popularized as gender and development (GAD) also

emerged in the 1980s as an alternative to the current approach women in development (WID)

(Rathgeber, 1990; Cornwall, 2003; Bücken & Zhurtanova, 2010). The process of developing a

new paradigm began in the 1980s, with emphasis on the relationship between men and women

in which women have been institutionally subordinated (Moser, 1993). The main purpose of

the GAD theory includes an agenda and strategies to improve the position of women in society,

22

replacing the previous women development approach of WID (Connelly et al., 2000). The

GAD approach to development sought to address the asymmetric gender relations and

inequitable development, which hindered women’s full participation in development

intervention programs and other economic activities meant for them (Connelly, et al., 2000).

The WID and GAD approaches are most often used synonymously, yet their theoretical

position is different with regard to the problems experienced by low-income women in the

Third World countries (Moser, 1993).

GAD is not concerned with women per se, but with the social construction of gender and the

imposition of specific roles and responsibilities for women and men. In the GAD approach

women are seen as “agents for change, rather than passive recipients of development

assistance” (Rathgeber, 1990:494), and stress the need to organize women for more effective

political voices for them (Rathgeber, 1990). Except WID and GAD, there is another

development approach that has not received much consideration from Western feminists,

which is styled as women and development (WAD) framework. This framework for women

and development was underpinned by the concept of empowerment, articulated by Third World

women since the 1970s. But the WAD approach as a new framework was not seen as an

alternative to a reformist WID approach (Agenda, 1997). From a critical position it is explicitly

argued that these development frameworks are of international importance, and do not often

serve the interests of women in countries to which these approaches are exported (Agenda,

1997). The underlying reasons for this is that, for example, the World Bank supports and

supplies gender development programs in many Third World countries of the world in line

with the market-oriented models of economic growth, and sets the parameters of this

aforementioned development (Kabeer, 1994, cited in Agenda, 1997).

However, many parts of the developing world are now under the coverage of NGO-initiated

development programs meant for reducing poverty and vulnerability of the poor, particularly

for poor women. As women tend to be the poorest of the poor, alleviating their poverty

increases development opportunities (Mitchell, 1996). NGOs throughout the world are actively

and systematically evaluating the impact of economic policies on women (Forsythe et al.,

2000). It is also argued that in many developing countries of the world, government initiatives

have failed to reach the poorest of the poor and have not adequately addressed the rich-poor

divide and rampant inequality (Streeten, 1997). Since 1971, Bangladesh has remained heavily

dependent on aid due to the lack of capacity to manage national population development. The

World Bank report shows that there has been a large increase in funds channeled into NGOs

23

(Lewis, 1997) that are operating in Bangladesh alongside the government aimed at poverty

alleviation (Siddiqque, 1996). A World Bank report indicated that 70 percent of all funds

pouring into Bangladesh are consumed by the 10 largest local NGOs; BRAC for example,

being one of the more prominent ones. During the 1980s, the majority of the work carried out

by NGOs was in the form of credit, income generation, and group formation. Most of the NGOs

form groups and provide credit to poor women in order to promote their social and economic

development (Lewis, 1997).

The lack of credit is considered to be the impediment to development, and a major constraint

to the expansion of freedom and opportunity to work and employment. These constraints are

evident for women who have no access to credit due to lack of minimum collateral for getting

credit facilities. Providing credit to poor women is indeed a practical solution to a wide range

of issues such as unemployment and poverty. NGOs in this case are placed in a position to

increase the economic, social and political power of women in their own families and

communities (Chen, 1986, cited in Amin & Pebley, 1994). Amongst many of the NGOs,

Grameen Bank was one of the prominent players of development for the poor women, which

was institutionalized in 1983 by the Bangladeshi government as a special credit agency of the

poor. Poor women from landless households were the primary target group of Grameen Bank,

with an explicit agenda to organize and assist them by providing easy credit to enhance their

economic activities by spurring self-entrepreneurship (Rahman, 1994). Following the thriving

success of microcredit programs of the major NGOs operating in Bangladesh, a vast number

of small and medium size NGOs are also taking the opportunity to offer credit to poor people

– particularly poor women – with the goal of poverty alleviation and the empowerment of

women in common. Many NGOs are now seen offering microcredit, while credit is feminized

against the socioeconomic background of the poor women in Bangladesh.

1.4. Research Questions

As a relatively new intervention tool and as the subject of global developmental policy and

public discourse, microcredit has gained momentum in recent academic discussions. This has

resulted in a lot of arguments both for and against the issue, and has therefore produced a vast

array of literature on the topic. Most prominent amongst them is poverty alleviation and female

empowerment as the crucial development issue on the agenda, in which social capital theory

has captured some attention in this growing debate as a field of investigation in the political

economy of development. A wealth of research exists on subjects such as empowering women

24

and alleviating poverty, whereas scant attention has been given to the issue of social capital

from the political economy perspective. Various authors attempted to trace the impact of

microcredit on poor women’s lives from different perspectives which sought to present the

reality on-the-ground of such programs dealing with the poor women in rural Bangladesh.

Many of these studies have at different points produced contradictory results. I have therefore

chosen to focus my attention on three development paradigms—social capital, empowerment

and poverty alleviation. This study endeavors to analyze the policies and practices of

microcredit programs, along with its tangible impacts on the lives of the poor women in rural

Bangladesh. This study concentrates specifically on analyzing the preeminent research

question: whether poor women’s participation in microcredit programs can potentially yield

any remarkable outcomes for their family, and which clusters of poor women benefit from

joining the credit programs. Therefore, the main research question is:

1. Do microcredit programs yield any remarkable outcomes for the families of poor

women, which group(s) of women in the study villages actually benefit from joining

the programs, and how?

Moreover, the proposed study attempts to analyze the answers of some of these questions by

turning around the following sub-questions:

1. If and how microcredit programs construct social capital through the disbursement of

credit to the poor women?

2. How do microcredit programs maximize the recovery of loans, and what technologies

can be applied in ensuring the timely repayment of loans?

3. How does market-based microcredit programs contribute to the reduction of poverty

and vulnerability for poor women?

4. How does microcredit programs empower women through market rationality, and to

what extent does it influence the existing gender relations in the family and broader

community?

5. What particular kinds of norms and values do microcredit programs nurture through the

operation and management of credit?

6. How and under what contexts do rural women get involved in the microcredit programs

of NGOs, and how do they (re)negotiate their traditions and values to cope with the

interventions?

25

1.5. Rationale of the Study

As a test case of development, Bangladesh has been an ideal site for developmental

organizations and international funding agencies. The growth of NGOs in many aid-recipient

countries has drawn significant academic attention. The case of Bangladesh has been

particularly prominent in many discussions, since it hosts some of the largest local

developmental NGOs anywhere in the world (Lewis, 1997). Since its independence in 1971,

Bangladesh has heavily remained aid dependent. Financial aid from the World Bank has long

been conditional on structural adjustment programs (SAPS), with bilateral funding agencies

retaining considerable influence (Lewis, 1997). Besides, NGO sectors in Bangladesh engage

mostly in microfinance and income generation activities, while also focusing on community

organizing work and policy advocacy (Lewis, 2004). From the 1980s onward, aid that was

being channeled to NGOs steadily increased. By the 1990s, NGOs had played a pivotal role in

increasing women’s access to resources through spurring income generation activities (Lewis

& Hossain, 2008). Meanwhile, the State remained weak in terms of its capacity to provide

welfare and other social services to meet the needs of its citizens. As a result, there has been

considerable latitude for both international and local NGOs to emerge alongside the

government (Lewis, 2016).

It is evident that NGOs have the ability to access poor people and meet their minimum needs

– something that local governmental organizations often failed to do. Thus NGOs could

increase the frequency of their deliveries to poor people, and in some cases they have in fact

achieved considerable success in providing the most crucial services for their beneficiaries. In

this example of successful initiatives by NGOs, Grameen Bank and BRAC have outperformed

all other NGOs, and have become the center of public attention for their efforts (Lewis, 2016).

Almost half of the population is female, and significant portions of them who live in rural areas

are found to be the poorest of the poor. NGOs are making their efforts alongside government

agencies to bring the poor section of women out of the vicious cycle of poverty through

incorporating them in self-employment and other income generation activities. From the

developmental and policy perspective, it is important to evaluate the programs offered by any

developmental organizations in order to recognize the limitations of such programs so as to

ensure maximum outcomes. There have indeed been a lot of evaluation studies done on

different programs that were offered by such NGOs. Amongst all these studies, microcredit has

often been in the locus of public discussion and policy analysis, and hence it occupies a relevant

and useful space in academic research since the inception of such programs.

26

Moreover, existing evidence shows that with regards to Bangladesh, most of the studies

(Wahid, 1994; Hashemi et al.1996; Pitt and Khandker, 1998; Amin et al.1998; Zaman, 2000;

Kabeer, 2001; Mazumder & Wencong, 2013) attempted to identify the impact of microcredit

programs on the lives of the poor women and painted a generally positive picture of

microcredit, while only a few studies (Schuler et al.,1996; Goetz and Gupta, 1996; Rahman,

1999; Karim, 2008; Karim, 2011; Jahiruddin, et al., 2011, Uddin, 2013) tried to unmask the

unseen façade of microcredit programs, and thereby open up a new horizon of knowledge.

Further investigation is therefore necessary to better delineating an issue that has largely been

left unexplored. This study has therefore attempted to explore the social context of rural women

that brought them to get involved in microcredit programs in the first place, along with

answering the question as to which and how groups of women benefit from participating in this

developmental intervention programs. This study has also focused on the crucial aspect of

microcredit programs for poverty alleviation and female empowerment with an intention to

delineate the actual image of poor women in the study villages, and to understand how and to

what extent the developmental intervention programs are achieving this goal through market

rationality. Moreover, it is also important to understand whether microcredit programs enable

poor women to better exercise their agency and autonomy in the sphere of family and in their

community despite being enveloped in a cultural climate of a largely patriarchal and sex-

segregated society.

Reviews of the predominant literature shows that most of the studies on female issues and the

alleviation of poverty used quantitative methods and attempted to analyze the general effects

of credit on the welfare of the borrowers’ household. However, in order to investigate such

endemic issues in the context of a very traditional society dominated by patriarchal social

norms calls for more in-depth ethnographic research. It is hoped that this study could function

as a policy guideline for the microcredit programs, in the interest of achieving the highest

positive outcomes for the poor people by taking their development perspectives into account.

1.6. Structure of the Dissertation

This dissertation has been divided into ten distinct chapters. Chapter one begins with an

introduction, which includes preliminary discussions pertaining to the study such as female

empowerment against the social background of Bangladesh, women in development in the

theoretical frame, research questions, and the significance of this study. Chapter two deals with

the methodology applied in conducting the study, including the research site, research

27

participants, rationale for qualitative study, data collection techniques, data compilation,

edition and analysis, research ethics and the limitations of the study. Chapter three focuses on

the theoretical framework that offers an overview of the existing literature on neoliberalism,

theoretical explanations on disciplinary technologies and governmentality, along with an

extensive review of the existing evidence on microcredit. Chapter four presents an analysis of

the social background of the study area along with the socioeconomic profile of the

respondents, development trajectory of microcredit in Bangladesh, and lending processes of

the Grameen Bank and BRAC in the study area. Chapter five discusses social capital and

microcredit relations, and explains how microcredit programs make important contributions in

fostering rural women’s social capital through the operational structure of the programs, in

addition to group lending and its effects on the social realities of women. Chapter six examines

the technologies used by the microcredit programs in maximizing the recovery of loans from

poor clients, and their subsequent effects on the life patterns of them. This chapter also analyzes

how poor women’s group, permanent residents, and even savings and deposit books function

as surveillance for checking the moral hazards of the clients, which results in the highest

recovery of loan. Chapter seven explores how microcredit undergirded by its attendant market

philosophy has emerged as a poverty intervention tool, reaching untapped rural areas and

cashing in on the poverty of poor women, along with credit competition in the untapped rural

markets. It also dwells upon how microcredit programs control the movement and consumption

pattern of its clients, along with the use of mobile phones to govern the economic behavior of

its clients. Chapter eight offers an explanation of the empowerment of women and their agency,

autonomy and freedom against a backdrop of their involvement in microcredit programs, along

with the corollary effects on their social and intra-household gender relations. Questions are

asked as to whether microcredit has overcome the challenge of the existing base of patriarchal

social structure through involving the poor women in income generation projects. Chapter nine

outlines the nexus between the poverty and vulnerability of rural poor women, and how credit

has been a coping strategy for many poor rural families, and has emerged as a new economy

in the context of rural society. It also focuses on how the poor clients have used credit and for

what activities, and simultaneously attempts to analyze whether microcredit has reduced the

level of poverty and vulnerability of the poor women through their involvement in NGO-driven

microcredit programs. Chapter ten draws general conclusion based on the findings coming

from the overall analysis of the data from the different issues that have been addressed in the

study, and ends up with some policy recommendations for future directions.

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CHAPTER 2

Research Design and Methods of Data Collection

This part of the dissertation proceeds with an explanation of the applied research design,

rationale for the form of qualitative study, and research approach based on the nature and

pattern of qualitative inquiry in addition to the selection of research site, research participants,

and methods for data collection, and justification for choosing microcredit programs of two

prominent NGOs, recruiting research assistants, data compilation, edition and analysis,

research ethics, and limitations of the study.

2.1. Research Design

Research design is the complete process of research that encompasses several stages from

conceptualizing a research problem to writing research questions, collecting, analyzing,

interpreting the data, and writing the report (Creswell, 2007). It is a systematic plan for

presenting an analysis of relevant data (Yin, 2009) generated through the application of

different data collection instruments best suited to the research issue. However, qualitative

studies have a mentionable number of choices and approaches (Creswell, 2007). Amongst all

these, an ethnographic research approach has been employed given the nature of the issue of

study. In the same vein, ethnographic research methodologies are considered appropriate for

generating the data by capturing and understanding the studied phenomena from the real life

experiences of the participants in a natural and holistic manner. By employing this approach, I

have interpreted the data from the perspectives of those populations under microcredit

programs of the Grameen Bank and BRAC in Bangladesh (Hancock, 1998). I have undertaken

ethnographic studies to observe and understand the world from the stand point of different

groups of poor women involved in microcredit programs (Henn et al., 2006) with the aim of

interpreting how they give meaning to their experiences (Bray, 2008). The main objective of

this interpretive ethnography is to explore both individual and collective understandings,

reasoning processes, social norms, and so on (Mason, 2002). In this study, I as a researcher

have collected meaningful information and data regarding the research issue through

integrating myself in the life world of the female microcredit borrowers. I was present at the

research site to observe the reproduction of day-to-day activities in order to understand the

ground reality of the rural poor women involved in microcredit programs and their attendant

lived-experiences. I have observed with regularity the interactions and activities of the female

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loan borrowers, along with their dealings with the members of the group and NGO staff. I have

also observed how they have been handling credit-driven income-generation activities, loan

delivery, and recovery system by the NGO staffs. Caution was taken to avoid disrupting their

normal way of life, in the hope that they would feel free to share and exchange their views as

spontaneously as possible.

Both primary and secondary sources of information have been used in the analysis of the data.

At the initial stage, I began the process of this study with some background information

acquired from the existing literature conducted and published by experts and policy analysts.

The relevant pieces of information obtained from the secondary data have enabled me to

develop the line of thought, pose research questions, and choose the frame of methodology for

the entire process of conducting the study. Secondary data refers to document analysis

(Hodson, 1999; Corbetta, 2003; Mason, 2002) collected from different published materials,

such as books, journal articles, working papers, reports by academics and researchers also have

been used to analyze the contexts of neoliberalism, especially the intervention of NGOs

through microcredit programs, and also to analyze the policies and practices of microcredit

programs and their potential impact on the life patterns of the borrowing women. Primary data

generated through in-depth interviews (Corbetta, 2003; Mason, 2002), case studies (Creswell,

2007; Baxter & Jack, 2008; Denzin & Lincoln, 2005) and direct observation (Mason, 2002)

have been used to answer the aforementioned research questions in an attempt to understand

the first-hand experiences of female clients involved in microcredit programs.

2.2. Justification for Qualitative Study

In social studies, the employment of qualitative methodologies is considered an effective way

of collecting information in a particular but meaningful context (Tedlock, 2000). It involves a

naturalistic approach to the world that connects both the understanding and the meaning

attached to the phenomena by people within their social setting, and in the process interpreting

the phenomena in terms of said meaning (Snape & Spencer, 2003; Denzin & Lincoln, 2005).

The knowledge, ideas and understandings emanating from the existing literature has also

furnished me with useful insights for comprehending the issue with respect to the lived

experiences of the rural poor women who are a major unit of analysis in this study. As an

emerging area of investigation in the parlance of development through microcredit, I have

directed my focus to the processes of neoliberal development, which requires a broader

understanding of the phenomena by participating in the local knowledge system. In any

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qualitative research it is vital to know and apprehend the meaning attached to the issue that

people create, sense and experience in their everyday lives in a particular social and cultural

context.

Following the qualitative research design, this study explores the reality and meaning of the

scrutinized phenomena from the view point of the research participants who directly

experiencing this reality in their social milieu and interactions, because “qualitative research is

characteristically exploratory, fluid and flexible, data-driven and context-sensitive” (Mason,

2002:24). It gives us a detailed understating of the study object (Creswell, 2007) by looking at

the ‘why and how’ of social action (Bray, 2008). In addition, the intellectual puzzles and

research questions posed in this study have nudged me to apply qualitative research strategies

to interrogate the wider perspectives of the female credit clients. The choice of research strategy

and primary idea about the investigation began with a survey of the available literature germane

to the issue. In this study, I have focused on the process of the neoliberal development by

situating women and microcredit in its nexus at the grassroots level in Bangladesh in which

qualitative research strategy has been deemed appropriate. Patton (1990) notes that qualitative

research is highly appropriate for studying processes that require detailed descriptions for its

depiction, the varying and veritable experience of people, the fluidity and dynamic nature of

the process, and the participants’ perceptions, which are key considerations. Indeed, the data

generated by employing any one method may not be sufficiently rigorous to accurately portray

the actual problem, because it raises questions on validity in certain cases. Therefore,

methodological triangulation has been applied for the collection of data from the respondents

(Mason, 2002; Porta & Keating, 2008; Yin, 2011).

2.3. Site Selection

Marshall & Rossman (1995) suggest that the “ideal site is where (1) entry is possible; (2) there

is a high probability that a rich mix of the processes, people, programs, interactions, and

structures of interest are present; (3) the researcher is likely to be able to build trusting relations

with the participants in the study; and (4) data quality and credibility of the study are reasonably

assured” (p.51). There are also certain implicit rationales that could be taken into consideration

while selecting the research site—the area of the study has to be representative enough to cover

and capture the picture of the larger population, the range of the phenomena under study and

the personal preferences of the researcher based on logic and rationale for doing the study

(Marshall & Rossman, 1995). For this study, I have sought to take all these aspects into account.

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Figure 1: The map of Bangladesh and greater study area in bold circle.

Source: Maps of World 2016.

The area selected for this study was Sylhet, a North-Eastern part, and one of the major divisions

of Bangladesh, which is approximately three hundred kilometers away from the capital city of

Dhaka, Bangladesh. I have selected two villages of the Sylhet Sadar Upazila named Chatal and

Kazirgaon. Moreover, the study area comprises a significant portion of the population covering

a vast area of typical rural social structure. There was some crucial reasons for selecting Sylhet

as an area of my study, which will soon be explicated. I have prior research experience on

microcredit and women empowerment that I conducted in the greater Sylhet region targeting

microcredit programs of these two reputable NGOs. Firstly, Grameen Bank and BRAC apply

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the same procedures and techniques for the delivery of microcredit throughout Bangladesh. My

interviews with the NGO staffs of Grameen Bank and BRAC have ensured that these two

NGOs operate in the same way throughout the country.

Figure 2: The map of the study area indicating in bold circles (edited)

Source: BD Maps 2014.

Secondly, being a faculty member of Sociology at the Shahjalal University of Science and

Technology, which is located in Sylhet, Bangladesh, I availed myself of the opportunity at

becoming more familiar with the way of life of the people of this region, as I myself have lived

in Sylhet for more than a decade. As a result, I have been able to develop my linguistic abilities

to understand and speak the vernacular of the local people, which has enabled me to access to

rural people in my study areas and mix with them without any hindrances, thus offering me the

advantage to talk to them in a more informal manner. Thirdly, I was also familiar with the rural

social structure of the region that I considered to be an added advantage vis-à-vis incorporating

33

myself into the social life of the research participants in establishing trust and rapport with

them. This is a significant part of qualitative researching, because building rapport (Creswell,

2007) is a sine qua non in data collection processes. Fourthly, I was also privileged to utilize

my university logistics and support for my research purposes, including hiring some qualified

research assistants from the university graduates, which proved extremely helpful and useful.

Finally, I could travel from my university to the preferred research areas relatively easily and

comfortably, which facilitated casual communication with the respondents, because frequent

visits to the study areas paved the way for making myself known to the community in order to

understand the phenomena from their “insider” point of view (Headland et al. 1990).

2.4. Research Participants

The nature of the research problem and the structure of the research questions clearly indicate

the selection of the main unit of analysis. Female clients who were the core beneficiaries of

microcredit intervention programs by two internationally celebrated NGOs—Grameen Bank

and BRAC—have been purposively selected for the interviews. Lincoln & Guba (1985)

suggest that “all sampling is done with some purpose in mind” (p.199). This sampling

technique has allowed me to select unique and information-rich cases for the investigation

(Mathbor, 2008). From the credit borrowing women, I have been able to elicit information with

regard to the context of their involvement in microcredit and their activities related to the

programs, social interactions with the groups and communication with the program officials.

Apart from the women credit clients, I have also incorporated NGO staffs (field managers) for

informal interviews to glean some relevant information. These managers were selected as

respondents of the study alongside loan-borrowing women for gathering information about the

loan delivery and management system of the microcredit programs. Moreover, I also had

general discussions with Union council secretary and local council members for some relevant

socioeconomic and demographic information on the study area. It was necessary to garner

information about how microcredit programs offer loans to clients, how and on what criteria

do they disburse loans, and what techniques they employ for ensuring the highest possible

repayment of installments in due time. It is vital to understand the microcredit policies and

practices, along with other strategies pertaining to the operation and management of credit for

poor women’s development. The nature of rural social structure is typically one that does not

allow any outsiders to easily enter the community. Traditional culture, norms and values of

society discourage women to have direct contact with the people beyond family relations. But

this situation has been steadily improving due to various social and economic forces; such as

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the increased NGO-related activities and the influx of outsiders. As a result, I did not encounter

any issues regarding data collection.

2.5. Why Grameen Bank and BRAC?

Both Grameen Bank and BRAC are two internationally famous and globally recognized

development NGOs from Bangladesh (Lewis, 2016; see Khandker et al.,1998) that offer

microcredit initiatives along with other development intervention programs in order to integrate

women in the developmental process aiming at the alleviation of poverty through self-

employment programs. Mohammad Yunus won a Nobel Peace prize jointly with the Grameen

Bank in 2006, which represented another driving force to take this microcredit institution to

new heights. The concept of microcredit was a seminal idea of the US Graduate economist and

Professor Mohammad Yunus who brought the un-bankable poor into the orbit of the banking

sector using social collateral as a guarantee of the loan – something which was almost

impossible in the traditional commercial banking system. In the commercially-driven

traditional banking system, poor people’s access to credit is hampered due to the lack of

collateral. Grameen Bank sought to change the traditional perception that the poor are not

bankable, and the project of microcredit then expanded across the country through its service

delivery to the poor. While this banking system for the poor faced a lot of initial challenges, it

eventually found its footing and established itself as a credible and useful institution.

Subsequently, the “Grameen style” of microcredit has transcended the geographical boundaries

of Bangladesh to be replicated in many other countries in the world. This pioneering

microcredit institution has thus drawn much public and academic attention, sparking off a

growing debate about the successes and failure of microcredit programs.

I did my Master dissertation on women empowerment and microcredit programs in Bangladesh

that has fueled my intense interest to learn more about the issue in greater depth and breadth

from a different point of view. The study I conducted for my dissertation was limited to desk

research based on the extensive review of relevant literatures and did not enable me to equip

myself with the practical knowledge to understand the lived experiences of women who are the

main beneficiaries of microcredit programs. Yet, as I was born and bred in Bangladesh and as

a native citizen, I had the opportunity to observe and see the poverty and plight of many rural

people there. While I saw a lot of women who were receiving microcredit for many years from

prominent NGOs such as Grameen Bank and BRAC, their fortunes remained unchanged due

to some unexplored reasons, which once again reinforces the intensity and depth of my

35

inquisitiveness to do research in this field. Other than these two, there are also a teeming

number of NGOs of this kind offering mainly credit programs with a focus on poverty

alleviation, targeting women in most cases with the logic of incorporating them into the

development process. Microcredit NGOs largely operate on the same logic and rationale, given

women’s social condition and family position and their relative vulnerability in the society

compared to their male counterparts. Although there are a number of NGOs currently in

operation, they have not come into prominence unlike Grameen Bank and BRAC mainly

because of their size, reach and frequency of delivery.

2.6. Methods of Data Collection

Data collection is the most crucial part of qualitative research, which entails different phases

and techniques to generate data by employing a variety of data collection strategies

synchronizing with the research design and approach to the study. Data collection techniques

are in this regard the building blocks of the study. The next step of the dissertation presents a

description of the techniques that have been used for the collection of data. I have therefore

embarked on the rudimentary process of the study based on document analysis followed by the

use of multiple techniques of data generation from the study participants.

Document Analysis: Analyzing relevant documents is a good starting point in any qualitative

social research. The analysis of secondary documents is one widely used method of social

research and many qualitative researchers see it as meaningful and appropriate in the context

of their research strategies (Mason, 2002). While conducting a qualitative study, we develop

conceptual frameworks and construct knowledge on the basis of available information with

regard to the issue in question, and in the process step closer towards a point of thinking with

definite direction and specific queries to reach its ultimate objective. As a result, the role of

reviews and analysis of existing qualitative data has been of great importance because it

“provide an opportunity to bring a new perspective to existing data, to use elements of the data

that have not been fully analyzed, or to form a base of comparison with newly collected data”

(Lewis, 2003:61). The main objective of this study is to explore the ground-reality of female

microcredit clients and to describe their predicament from their own point of views. In this

regard, my idea, conceptual understanding and knowledge related to this field of study mostly

has come from the existing evidence base such as books, journal articles, working papers,

conference papers, and electronic sources. The construction of research questions and selection

of research methodology was mainly based on the available information gathered from the

36

background literatures, which have provided a firm conceptual footing, a solid understanding

of the issue from a different perspective and a broader idea about the way(s) to design the

research in order to achieve the coveted research goals. The analysis of documents in this case

is a commonly used method in qualitative study, which supplies pertinent information for

getting the meaningful answers to the research questions (Hancock & Algozzine, 2006).

Analysis of secondary data has potentially important implications for qualitative researchers

who seek to explore the issue of gender studies, development evaluation and contemporary

developmental programs addressing marginal social classes like poor credit-borrowing women.

The analysis of documents has provided me with the requisite skills, knowledge, and

understanding of the research issue, conceptual clarification, theoretical insights,

methodological rigor to organize the layout of the study, and framing in general the whole idea.

Direct Observation: One of the most commonly used data collection techniques in qualitative

research is observation. Observation usually refers to the methods of generating data in which

the researcher’s immersion in a research setting is important to experiencing and observing

first hand a range of dimensions both in and of that setting (Mason, 2002). In the observation

process, watching and listening is the major function of an observer who records the observed

phenomenon and actors in the form of keeping field notes. Jenifer Mason argues for the purpose

of observation, suggesting that we cannot generate meaningful knowledge without observation

because it is not possible to articulate, recount and/or construct all knowledge in an interview

(Mason, 2002). It is very natural that some of the relevant information remains missing in the

interview. Therefore, the missing elements in the interview and other useful information from

different dimensions needed for the study have been obtained and substantiated through the

observation process, thereby adding more crucial information that is relevant for the research.

As a widely used technique of ethnographic research, it has offered me the best possibility to

observe the life world of credit-borrowing women in a natural setting. Being in the social

setting of the study participants, I have been able to observe and record the information about

the workings of developmental intervention programs of microcredit in the remote rural social

structure, especially by watching the life situation of the female credit clients, their role and

regular activities in the family, along with other functions related to income generation

programs and to organizing the group meetings and maintaining interactions with other group

members in the self-selected group.

Moreover, observational methods have also been used to record the information and actions

occurring in that social setting. This approach has offered me a greater opportunity to observe,

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feel and realize the actual situation of the loan-borrowing women and gather relevant

information from them in order to present an authentic and unvarnished image of these poor

women according to what they have experienced in their lives. My position as an observer in

the field has offered me an opportunity to hear, to see, and to experience the reality of the

participants as accurately as possible (Marshal and Rossman, 2006). In this situation, I have

been able to witness how loan-borrowing women have used and maintained credit for the

alteration of their lives, how they have dealt with the NGO staffs with regard to repayment,

and how they negotiate their traditional norms to cope with the interventions. My role as an

observer has also provided me a chance to see what women had roles in the center meeting in

the local loan centers, and I have recorded the meeting minutes for my study purposes.

In-depth Interviews: Interviewing is simply a conversation with the specific purpose of

gathering information (Denzin, 1978; Marshall & Rossman, 1995). The main purpose of this

conversation is to elicit the participants’ worldview regarding how they come to attach certain

meanings to certain phenomena. This is naturally the basic principle of qualitative enquiry in

which researchers largely rely on in-depth interviewing techniques (Marshall & Rossman,

1995). I have employed semi-structured interview in my study, which involved a number of

open-ended questions based on the topic of the research that I wanted to explore. One of the

advantages of using semi-structured interviews was that it offered the interviewees a chance to

express themselves freely and frankly and to define the world from their own perspectives

(Hancock & Algozzine, 2006).

In-depth interviewing in qualitative research is regarded to be a common form and a natural

way of gathering information from the participants, in which there should be free and flexible

relationships and good understandings between the interviewer(s) and interviewees. The open-

ended/semi-structured questionnaire has been employed in a natural setting (Ritchie, 2003) in

order to make an analytical comparison (Mason, 2002). This data gathering technique has

provided me the possibility of having relevant information from female loan-borrowers in order

to explain the reasons why they get involved in microcredit programs and how they use loan

money to spur small business enterprises for any income generation activities. It also analyzes

how microcredit contributes to the construction of social capital, poverty alleviation and

empowerment of women. In the same vein, the staffs of the local NGO office have informally

been interviewed in order to understand how they manage microcredit and what strategies they

usually apply in cases of loan collections from the poor women and what mechanisms are

appropriate for the recovery of loan from the clients who default on timely repayment.

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Moreover, how microcredit programs have helped poor women get out of poverty and why

they constitute women’s self-selected groupings for disbursing loan has been explained through

the data from in-depth interviews. During data collection from both female borrowers and NGO

staffs, I asked them questions pertinent to my research issue and listened to the respondents in

order to understand the meaning of what is being said. I have used interview guides, techniques,

strategies and procedures to make the interview as flexible as possible and recorded the field

notes instantly so that there would be no reduction or loss of the original information provided

by the respondents. I therefore sought to make verbatim transcription as far as possible in the

recorded notes, along with tracking progress of my fieldwork. I have classified the data

according to the objectives of my study and needs of my analysis. I did not have any problems

that would hinder the normal progress of interview and the whole data collection processes in

the study areas. The most important reasons for this were that some of the local people were

already oriented with the focus of my study and I have been familiar with them within a few

days.

Case Study: Apart from in-depth interviews, I have also used ethnographic case-study

methods. Through ethnographic case studies it is possible to explore observable and learned

patterns of behaviors and the ways of life of these female clients of microcredit programs.

There are also certain reasons for choosing case study methods in the generation of qualitative

data. Compared to other research methods, case studies are the most appropriate choice for

addressing some of the research questions posed – such as the ‘how’ and the ‘why’ – to explore

a complex research problem (Yin, 2009). A qualitative case study is meant to be holistic,

specific, empirical, historically interpretative, and causally analytic (Ragin and Backer, 1992;

Yin, 2009), which is the product of field oriented research rather than merely a strategy or

method. I have used the case study of female clients of microcredit programs in order to get a

wider picture and in-depth understanding of the problem, and thereby analyze, interpret, and

impute the meaning and experiences of the participants who are the main objects of analysis.

2.7. Gaining Access to Respondents

In April 2015, I began the preliminary process of data collection for my study. I began the field

visit procedures by seeking official permission from Grameen Bank and BRAC. In the very

initial stage of the fieldwork, I visited Grameen Bank and BRAC offices in order to have formal

approval from the authority concerned so as to get access to the respondents of my study with

the support of the NGO staff. It was not a smooth task for me to obtain permission from the

39

Grameen Bank local manager. There were reportedly some restrictions to accessing the clients

of Grameen Bank due to the tighter administrative regulation of the Bank. In fact and at the

very beginning, the manager gave the excuse that some individuals went to their clients and

collected some information in the name of research, and subsequently published a damning

report on Grameen Bank in the national newspapers that tarnished its reputation. As a Nobel

laureate institution, Grameen Bank has gained extra attention from different academic circles

both at home and abroad, in some cases triggering a lot of criticism.

Despite the seemingly non-cooperative disposition of Grameen Bank, I made sincere efforts to

convince him by introducing myself as a Faculty of the Department of Sociology and a

researcher at Shahjalal University of Science and Technology, Sylhet, Bangladesh. I assured

him that the information gleaned from the respondents would only be used for academic

purposes. In spite of this, he remained reluctant to give me official permission, and he instead

suggested that I go to the regional head office and put in a formal application. I decided that I

would not go to the head office for official approval for fear that it might result in an even more

prolonged process due to bureaucratic procedures and red-tape. I went straight to the head of

the Department at my University and requested him to write a letter to the local manager of

Grameen Bank clearly stating that the research would be done on the bank’s clients as part of

an academic study, assuring him that any kind of activities or policies proposed regarding the

microcredit programs of Grameen Bank would not malign the reputation of the institution. I

also personally wrote a letter to the manager appealing for permission to collect data from the

credit-clients of Grameen Bank.

The following day, I went again to the local office and submitted both of the applications to

the manager and sought his kind cooperation in my research project, and took down his cell

phone number. Having properly scrutinized my papers, he accepted my application later that

day and promised to schedule an interview session with me. After a few failed attempts to

secure a meeting, he eventually took me to one of the program villages named Chatal where I

conducted my research. I thanked him for his cooperation, and for apportioning some of his

valuable time to me. I visited the program village along with my research assistants repeatedly

over the next few days so that local people would recognize and feel at ease with our presence.

Secondly, I went to the BRAC office and approached the office manager explaining to him that

I needed his help in conducting my research on BRAC microcredit programs. The manager

pleasantly obliged me and asked me to visit his office on any convenient day as he was engaged

40

in his office work at that particular moment. At this point I saw some people were thronging

around the desks of other officials, and most of them were credit borrowers with presumably

the male members of their families who were loitering around the corridor. Candidly speaking,

it was not very difficult to get permission from BRAC because there were no restrictions on

doing research on its programs. The only problem I faced was the lack of availability of the

person who would take me to the study village where microcredit programs were in operation.

I took down the field officer’s cell phone number. One day I called him requesting him to take

me to the clients in that village. By this time two of my research assistants and I paid a visit to

the BRAC program village named Kazirgaon so that we could have a clear idea about the

setting and profile of that village which I considered to be a relevant part of my work. In this

way I had a vivid picture of the two study areas, which paved a smooth road for starting my

field survey in a promising manner. It had already taken a few days to receive official approval

for commencing the data collection from the clients of Grameen Bank and BRAC microcredit

programs in these two villages.

The official formalities were done. Approval for working with the credit clients was granted. I

had a talk with the Grameen Bank local manager who was supposed to take me to its program

village named Chatal. We travelled there via his motorbike, where we found two centers

comprising 64 female clients. Every center had a center chief chosen by the Grameen officials

under which all loan borrowing women were dealing with regarding loan activities. I reached

the Grameen center after almost half an hour. I also asked two of my research assistants to get

to the same place at the given time. The area manager also introduced me as a faculty of the

University to the field officer and told him to lend me all-out support with respect to research

on the study village. He also approached some women who were clients of that center and

implored them to cooperate with me in furnishing information regarding my proposed study.

As I had chosen two centers of Grameen microcredit projects in the same village to study, after

nearly an hour I went to another center to be familiar with different credit-borrowing women

from the same village. The area manager introduced me with the center chief popularly known

as Rachana to the villagers. Luckily, I met a good number of women in that center who were

gathered there to repay their installments, and they were also embroiled in discussing the loan

conditions and related affairs. It is worth mentioning here that in the rural society of Bangladesh

people living in a particular social setting typically strive to cultivate good social relations and

strong rapport with one another. As a result, microcredit has become one of the most effective

catalysts to bring women together and closer to each other – there are essentially reciprocal

41

relations that strengthen their social ties and feelings of solidarity. Generally, rural women tend

to feel shy when appearing in public or in front of strangers. However, due to the fact that the

Grameen area manager was with me and urged all the women present to provide me with the

necessary assistance with regard to the issue, I was able to circumvent this potential hurdle.

Everybody was very enthusiastic and curious about my work and asked me when I would visit

them. I told them I had just come to make myself familiar with them and from the next day on

I would start visiting their homes for my purposes. I bade goodbye to all with a promise to visit

them the following day.

As I had a formal introduction to all center chiefs and a good number of credit-borrowing

women of Grameen Bank, in the same vein, I started the next step, which was to visit a BRAC

program village. One day I called BRAC field officer who told me that he would be available

only on Wednesday of the second week of the month and asked me to be in the study village

on this very specific day if I wanted to meet him in the village. According to the BRAC official,

Wednesday was the loan collection day where all women gathered in a center chief’s house

and came to pay back installments to the field officer under the guidance and supervision of

the center chief. My research assistants and I went to the village in a CNG auto rickshaw that

took around one hour to reach there. When we reached the village, the bystanders in the street

gave inquisitive looks, and some of them asked about where we would go and why we were

there. Naturally we had to give friendly responses to their queries and disclosed our intentions

to visit the village, and to learn the location of the BRAC center chief’s home. Hawarun and

Rahmatun were the center chiefs of BRAC microcredit programs, individuals who were well

known to everybody in that village. Most of the people guessed that we were from BRAC main

office to visit the village. But we dispelled their confusion and clarified our position by

explaining our purpose of visiting the area.

When we arrived at a grocery shop in that village, a refined young man approached us and

enquired about the different issues related to my study. I chose the young man – who was

named Gaus and was around 23 years of age – to be our local guide so that we could easily

identify each and every member’s house of BRAC microcredit program. Gaus was a

tremendous help for me from the very beginning to the end of my data collection in Kazirgaon.

We then proceeded to visit Hawarun’s (one of the center chief’s) house, who unfortunately at

that time was not at home, and we did not have her cell phone number to contact her. Her

daughter named Runa happened to be present at home and I requested that for her mother’s

contact number, which she obliged and I immediately called Hawarun. She replied that she was

42

far away from home and would not be able to return soon, suggesting going to her home the

very next day to discuss my purposes with her. We left the village shortly after 2 p.m., and

came back to our accommodation for that day in a CNG propelled three-wheeler.

The next day my research assistants and I went to Kazirgaon village to be introduced with the

center chiefs whose support in the entire data collection process was badly needed. The travel

to and from the research area was not only time consuming, but also costly which hindered the

normal progress of my work in that village. However, I reached one of the center chief’s houses

at 11 a.m. The center chief was not particularly welcoming at the early stage of discussion, and

showed her reluctance to engage in a long discussion with me. I contrived to reassure her that

the work was solely for an academic purpose and not for any other motive that might otherwise

be detrimental to the interest of the clients of the BRAC microcredit programs. Sensing her

suspicions regarding my intentions of conducting research and data collection, I made a call to

the field officer so that he could clarify the aims and objectives of my work to the center chief

again, which would enable me to go further ahead with my work with the clients. Later the lady

became convinced of my benign intentions, and subsequently demonstrated her keen

willingness to lend a cooperating hand for the sake of my data collection. By the time I arrived

at the center chief’s house, a lot of people mostly women were rushed into the house and they

rapidly thronged us.

This was a typical rural area dominated by traditional norms and values. People in that area

were usually unused to encountering outsider. Most of the people were very surprised to see us

and some began whispering in hushed tones to each other. I spent a good number of days just

for visiting the study village because without entering the hearts of the people it was almost

impossible to get candid data from the respondents. Thus repeated visits to the area enabled me

to have a regular contact and fruitful day-to-day interactions with the local people, particularly

with the female clients of the program.

I also paid a visit to another center chief house in the same village where BRAC offers

microcredit programs, dividing the number of clients into two centers for the convenience of

the management. The center chief named Rahmatun was the poorest woman amongst the four

center chiefs of Grameen Bank and BRAC. She was working as a maidservant in the house of

an influential local figure. Although I visited her house frequently, her occupational

responsibilities ensured that finding her free and unoccupied at home was no easy feat. One

day her daughter called and informed her that some people from university were waiting for

43

her to have an important talk. At last she appeared in front of us with a smiling face and wanted

to know what she could do for us. I explained my purpose of visiting the area and talking to

the people who were the borrowers of microcredit from BRAC under her center. She gave her

assurances to assist me as best she can, with the only caveat being that she would not be able

to devote much of her time because she had to go back to work in the home of her employer. I

was convinced and gave her my nod thanking her for spending some of her precious time with

me.

One of the main reasons for liaising with the center chiefs was to solidify my position in the

rural setting, and to build trust among locals so that they would recognize that I was there with

good intentions. It was at the same time very important to make myself familiar to every loan-

borrowing women which helped me get close to the respondents. At a certain point of time the

situation was very favorable in the sense that due to my frequent visits to the village, people

accepted us graciously and began to treat us almost like native villagers. In fact, it was not

expected that we would be able to glean information from the respondents in a direct or

straightforward manner as per the needs of the research. On the contrary, it was more than data

collection in the sense that I had to enter the emotional milieu of the respondents in order to

appreciate the actual realities of the experienced phenomena through continuous interactions

with them. Visiting the village and observing the social, cultural and political environment of

the rural people has given me an added advantage for the next course of work, and enables me

to have a vivid picture of the area under study.

Indeed, I did not face any official limitations having received approval from the BRAC local

office. Moreover, I was fortunate that the regional manager came from my region, and he was

helpful enough to instruct all other local officials to give me their cooperation. One day after I

finished my preliminary activities and obtained the identities and locations of all the women

under the two centers of BRAC microcredit programs, I called the field officer to fix an

appointment on a day that he would be present at the field center. Finally, he gave me a time

that was on some Wednesday at 10 a.m.

As per the appointment, I called two of my research assistants and asked them to gather in front

of my University gate sharp at 9 a.m. because it took nearly one hour to reach Kazirgaon

village. Everybody was there at the stroke of 9 a.m. We hired a CNG-run auto rickshaw, which

was the most popular and widely available mode of transportation in that region. At last we

reached Kazirgaon and found a group of women were gathering at a road side tin-shed house,

44

even though it was not a center chief’s house. I asked some of the women about the location of

the meeting with the field officer that day. They told me that most often the meeting was held

here (in the tin-shed house) instead of center chief’s place for field officer’s convenience. We

were still waiting and the appointment time was over, but the local field officer was yet to be

there. After well over half an hour he arrived at the center where we were waiting for him. At

last he came and apologized to us for being late. Within a few minutes the house was full of

women, and various groups with different loan-related issues began to swamp the officer. The

signs of frustration on the faces of some women were becoming increasingly visible. The

officer asked me how he could help me. We asked him to introduce us to the women and request

that they lend us their cooperation regarding the eliciting of relevant information that we

desperately needed. The officer introduced us to all the other women there and asked them to

help us by providing the necessary information. We were already familiar with most of the

women by the time the officer introduced us to them as we had earlier embarked on a door-to-

door visit to the clients’ houses. Since it was loan collection day, this was an opportunity for

me to directly observe how BRAC local field officers dealt with the clients; collected

installments, and how other women passed stressful time for the repayment of loan. Some

women were rushing to pay the installments back to the officer, while others were locked in a

fierce quarrel with the center chief lady due to their status as loan-defaulters. Bargaining,

conflict, and altercations over the repayment of loans was a constant feature. Another group of

women were talking to the field officer in the hopes of persuading him to accept half of the

installment to be repaid. Unfortunately, the field officer was rather firm in his decision not to

accept their request and refused to receive the fractional amount point blank. I instantly wrote

down my observation notes and instructed my research assistants to do the same.

At one point in my work at Kazirgaon village, I came to realize that some women might not be

forthcoming enough to provide me with the necessary information regarding my study. I

guessed that some women might give misleading information, as they were still feeling

somewhat skeptical about the intentions of my work. Some of them might have thought that

we were from the BRAC main office and any kind of adverse information would go against

their interests4, which indicates that women seeking loans from NGOs might be denied if they

4 I observed that some of the women were very cautious while talking to them because they feared that providing

information that goes against the image of the NGOs would be detrimental to their interests. There is some

information regarding the recovery of loans, which somehow reflects the negative role of NGO workers. As a

result, some clients were reticent to share their views in the initial stage of data collection.

45

provide any information that somehow goes against the NGOs. As a result, they would not be

offered credit in future. Out of this fear they might hide the actual information and furnish

instead distorted data, which would indelibly compromise the results of the study. So one day

I devised to take a CNG auto rickshaw driver in which we were traveling from the village to

my department at university so that he could see that we were from the university and not from

an NGO. I treated that person well with some snacks and drinks and offered a generous tip.

Following this, a good impression of us was engendered in that region because the driver was

from the same neighborhood and he himself began to convince others that we were “good

guys” from the university. I came to learn this information from our local guide who gave me

this information of the village.

Remarkably and with the exception of one incident in Kazirgaon, I managed to avoid any

awkward situations in my various field trips. One day when we started conducting the survey,

a man over the age of fifty arrogantly came forward and asked us to go his grocery shop. This

resulted in a rather anxious predicament, as we did not know what intentions he had on his

mind. As a university faculty member, people showed their respect towards me that was

another support to my credit. Moreover, I had official permission that was also another back

up for conducting my work. In any case, we went to that person’s shop, where he repeatedly

asked me questions such as “why did you come here”, “where were you from” and “why are

you talking to the women”. In rural Bangladesh, women naturally do not talk to strangers, and

male members of the family usually do not allow young ladies to talk to people who are outside

the locus of their family or kinship relations. We somehow managed to convince that guy of

our benign intentions and he subsequently became very polite, ending our encounter with some

biscuit and cold drinks. I offered to pay him for this treat but he declined to accept it. I found a

big difference between the attitude of this individual in the initial stage and his behavior in the

end. It was like that the content is different from the label. I ended up my mission for that day

with a plan to start with the survey on the selected women from the next day on.

The study village of Chatal was nearer than Kazirgaon. It took approximately half an hour to

reach that area via auto rickshaw. Every day I began my journey to the village at around 9 a.m.

in order that I arrive on site by 10 a.m. In general, women in this rural setting commenced their

household activities at noon. It was due to their hectic schedule that it was not feasible to have

talks with the women while they were engaged in chores. Rural women also had very little

leisure time to themselves during the day. It was however observed that they tended to be less

busy in the morning and in the afternoon. In some cases it also happened that women were

46

busy consoling their infants. In these circumstances, I tried to delineate the subjects under

investigation from the viewpoint of the respondents, and I was especially looking for an

opportunity to meet them in either of these two periods of the day. There were instances where

I did not have any formal interview with the women, but instead had informal conversations

with them and other local people so that I could get some insights into their community as an

insider. Understanding the phenomena from the perspective of the natives was the main motive

for mixing with the locals, along with securing easy access to the respondents. In Chatal village

I met a good number of middle-aged people who drove CNG auto rickshaw near my university,

and even some guys employed as security guards in my university assisted me in building up

trust among people, which considerably eased the process of my data collection.

In the village people called me baro (senior) Sir and my research assistants were called choto

(junior) Sir and madam respectively. Everybody was friendly in their gestures, and extended

the greatest possible amount of cooperation from different fronts. When I first entered the

village I did not know anybody save for one of the center chiefs from Grameen Bank. That first

day she was very busy and could not allocate any time for me, and she suggested instead

visiting her home some other day. Meanwhile, I went to a home in the vicinity of the center

chief’s residence. In that home I met a girl named Taslima who appeared at the School

Secondary Certificate examination and was waiting for the publication of her final results.

Taslima, and her aunt named Safina – who also happened to be a microcredit borrower of the

Grameen Bank – assisted me in identifying other loan-borrowing women in the neighborhood.

Even Safina’s husband, who was a fish trader in a nearby local market, chipped in some useful

information regarding the houses of other loan ladies in the contiguous areas. The most helpful

person in the entire village was one of the center chiefs of Grameen Bank who spent a

substantial amount of her time traversing every nook and corner of the villages with me so as

to locate the houses of credit clients. The lady was a familiar face in her locality and everybody

showed due respect to her because of her amiable manner and etiquette. It would indeed have

been much more cumbersome and time-consuming for me to identify all the borrowers of

microcredit in a village of this size by myself. Thanks to Taslima, her parents, and the center

lady-chief, I was able to conduct my research and data collection with ease.

In the Chatal village Grameen Bank primarily had one big center with more than sixty clients.

After the size and popularity of the Bank became expanded, the Grameen Bank authority

decided to divide the center into two with different center chiefs. When it was under one center

47

every female member was well known to the first center chief. I went to the second center to

talk to the center chief, Kanchan Mala, who also provided me with her assistance.

No unpleasant incidences happened during my stay in the Chatal village for the duration of my

data collection. Every woman was open and amiable, cordial and cooperative, and very curious

to know about the research results. A lot of women asked whether they would be benefitting

from this work and how. There was in fact no direct answer to those questions on my part.

Other than the respondent women, all other people who were not considered as respondents

had also been very accommodating, and welcomed any kind of queries from me. I worked as

an observer and insider during the whole stay in the Chatal and Kazirgaon villages. During my

breaks, I would go to the village and sit with the local people in a tea stall. I also shared my tea

with people who offered me help. The main intention was to get into the inner circle of their

hearts and minds and solidify my presence as an inhabitant of their neighborhood.

It was, by and large, not difficult to get into the hearts of the local people. They treated me

well. There were even cases of people who were eager to provide me with information and

share their stories – indeed, it seemed as though they were looking for any opportunity to share

the experiences of their lives. As the day went by, I had been like their man, which strengthened

my position in the village and paved the way for entering the very core of the hearts of

respondents.

2.8. To Start with the Data Collection

I started my data collection by conducting surveys. There were some reasons for why I

conducted surveys despite being an ethnographic research. First of all, some quantitative

information was needed in order to segregate women into different income groups and reflect

their socioeconomic profile such as their family income, level of education, major occupation,

their average family size and length of their involvement in credit programs. Secondly, in a

qualitative research it was equally essential to build rapport with the respondents. This offered

me an opportunity to get rich and relevant context-specific information. So in this case I had

the scope to develop cordial relations with all credit borrowing women during the collection of

survey data. Thirdly, surveys offered me the ability to choose extreme examples for in-depth

interviews and case studies while collecting the socioeconomic data from the selected women

of the study villages. Moreover, I made door-to-door visits for the collection of survey data

that enabled me to observe the life pattern and the socioeconomic conditions of every woman

48

involved in microcredit programs, which would not have been possible if I had proceeded only

through interviews and case studies.

The total number of population I surveyed was 114 from four centers of both Grameen Bank

and BRAC, two from each who were the regular credit borrowers from either Grameen Bank

or BRAC. I selected two centers of Grameen Bank from Chatal village and two centers of

BRAC from Kazirgaon village where Grameen Bank and BRAC have been operating

microcredit programs for many years. Grameen Bank had 64 members in two centers

consisting of 40 and 24 members each whereas BRAC had 50 members comprising of 25

members in each center. I spent the entire month of April for collecting the survey data. When

the survey was done I started to have in-depth interviews with the respondents that I selected

during the collection of survey data. Surveys gave me an additional advantage for identifying

the typical cases, and also helped to build a strong relationship with the respondents. In this

sense there was immense benefits to be gleaned from surveys right before the intensive

interviews with the respondents. I had in-depth interviews with 49 women clients from four

centers of both Grameen Bank and BRAC. Of them I selected 13 women from one Grameen

center in Chatal village and 12 from another center of the same village while the rest of the 24

respondents were selected from two BRAC centers in Kazirgaon, suggesting 12 from each

center. I also took the length of their involvement in microcredit programs into consideration

to see if poor women have experienced any significant changes in their lives over time. I

continued the interview with the women so long as I was getting relevant information from the

respondents. When similar information was coming from the respondents, or when there was

little variation in the information provided by them, I stopped the interview as I got no further

relevant information from the targeted respondent. I had case studies of 19 typical women in

two phases from four centers of Grameen Bank and BRAC, containing 7 and 5 from Grameen

Bank respectively and 7 from BRAC consisting of 4 and 3 from each center in order that I

could garner holistic views and get a comprehensive picture of the phenomena. When I started

to analyze the data, I found some information gaps and, after consulting with my supervisors,

went to the field again in order to bridge that gap. This time I did not have in-depth interviews,

but rather conducted case studies of 10 typical women. I also had informal talks with four NGO

field officers in order to learn about their perspectives and share experiences with regard to

methods of loan recovery and the management systems followed by the programs. In the

primary phase I had informal talks with two of Grameen’s and BRAC’s field managers one

from each center. Later I also had informal talks with two other field workers of Grameen Bank

49

and BRAC in order to fill the lacuna of information that the first phase of my data collection

failed to glean. Moreover, I also collected some official information both from Grameen Bank

and BRAC relevant for my study in the second phase of my data collection.

The time frame for this study ranges from April 1, 2015 till mid-October, 2015. During that

time I spent almost every day in the field for data collection, and I sought to directly observe

how women in that region experienced their social reality and led their lives. I instantly noted

down what was observed in the field regarding the various socioeconomic implications of loan-

borrowing women in the villages. Moreover, I also had information from the neighborhood

people about the social structure and other social relations in their everyday life among people

of the two villages selected for the study. Most often I talked to the local people with the

intention of strengthening my position in the locality so that they would feel free and frank to

share relevant information and put their trust on me.

I needed some information about the location, the total number of population and literacy rate,

male and female ratio, predominant occupation of the people of the area and their

socioeconomic conditions from the respective Union Council office. One day I went to the

Union Council office when the Chairperson was absent. I noted his number and called him the

next day seeking to schedule an appointment. I wanted to know about the overall picture and

other socioeconomic conditions of the population in the villages and he gave directives to his

secretary to furnish me with the appropriate information. The senior citizens of the locality

were in fact the key informants who provided me with the necessary information, such as the

major occupation of the people. They gladly and spontaneously shared their lived experiences

of the social setting in the region. Direct observation had indeed given me sufficient

opportunity to accumulate knowledge and experience about the life patterns of poor women in

this rural setting. I also asked the NGO official about the situation of women in the program

villages because those people had up to date information about the socioeconomic conditions

of women, their lifestyles and other socio-demographic factors as they have been working with

the women of this particular area for an extended period of time.

In addition to this, I also consulted with the Statistical Year Book of Bangladesh, which

unfortunately was not updated. That is why I chose to amalgamate the information given by

different stakeholders into account including my field level data for depicting the

socioeconomic profile of the respondent women and inferring knowledge about their life

situation. So far as my knowledge suggested, there seemed to be dearth of secondary sources

50

of information (such as books, articles or any other scholarly literature) on this very aspect. As

a result, the information that I derived from the field constituted the basic building blocks of

constructing the socioeconomic structure of the respondents. For the researcher engaging in

fieldwork and data collection, both the temperament and tempo of the surrounding environment

must be taken into consideration: for example, avoiding scheduling interviews at odd timings,

along with the mood and state of mind of the respondents/interviewees, as all these factors

influence the quality of information elicited and garnered. I usually tried to avoid interviewing

the respondents when they were engaged in personal or familial duties. I often brought some

sweets and chocolates for the young children, so as to keep them pacified during the interview

sessions with their mothers. I also offered small amounts of money to very poor women who

could not afford to buy food. This ensured the minimization of interruptions during the course

of the interview, and allowed for the creation of a rather smooth and congenial atmosphere,

which enabled me to solicit for good information. I sought to take note of every facet of a

particular problem or issue faced by the respondents, and I prevented the loss of information

by taking real-time notes with as much meticulousness and immediacy as possible.

The weather conditions were an important factor for the study. When I commenced my visit to

the field for data collection it was the month of April with the onset of summer, which was

more or less favorable for my work. Two months into my data collection, the rainy season

began. The rainy season in Bangladesh stretched for a longer-than-usual duration due to climate

change over the last few decades. Sometimes it rained torrentially for days, rendering me

unable to visit the research site daily as I had planned due to the inclement weather, which

hampered my field activities in a multitude of ways. In similar fashion, vehicle management

and the distance of the study area was made even more challenging due to the rain. It is worth

mentioning that during the rainy season in Bangladesh it is really difficult to travel to many

places, particularly the rural areas. Roads or tracks in rural areas were often muddy and were

not smooth for walking, let alone driving. Given this predicament, there were times when I had

to suspend plans to visit the village. Besides, it would have been difficult to record any

interviews and respondents with the heavy rain battering the tin-roofs. I also found that people

who were really poor often did not encourage me to visit their houses on rainy days because in

many instances the space in the houses were limited. All these factors ensured that certain

opportunities to visit the villages during the rainy season went unrealized. I nonetheless

resolved to redouble my efforts during the occasions when the weather was more forgiving.

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2.9. Recruiting Research Assistants

I recruited two research assistants for the collection of field data and imparted proper training

to them well ahead of commencing the fieldwork. They were the Master’s students from the

Department of Sociology at Shahjalal University of Science and Technology, Sylhet. One was

male and the other was female, with both having good track records and prior experiences in

research and data collection. Both of them were native to the greater Sylhet region, and had the

advantage of conversing comfortably in the local vernacular. Furthermore, given that these

students were under my tutelage at the undergraduate level, I was well acquainted with their

backgrounds and academic strengths. Considering the sociocultural context of rural society in

Bangladesh, I felt it would be appropriate to recruit 1 male and 1 female assistant. In rural areas

it is common for women to feel shy in front of male persons, particularly those unfamiliar to

them. In my study areas, society was strictly structured by traditional norms and values,

although this tends to be true as a whole throughout rural Bangladeshi society. As a male

individual, I intuitively sensed that I might encounter difficulties accessing female credit clients

in the rural areas, and I was concerned that my uninvited presence in the village with other

male researchers might be met with some discomfort or consternation for the inhabitants. As a

native of Bangladesh, I was au fait with the social-cultural norms of various regions, in

particular my research areas. I also surmised that in certain instances what might be easy for a

woman might be difficult for a man in the social backdrop of rural Bangladesh. Therefore, I

felt it was prudent to appoint at least one female student as my research assistant for the

purposes of smooth data collection for this study. Employing a female research assistant along

with her male counterpart has indeed yielded positive results for the inclusive data collection

processes.

As all my respondents were women, I felt it was appropriate to have a woman interviewer so

as to get easy access to the participants and build rapport with them through informal

conversations on a regular basis. In a qualitative data-gathering technique, informal talk is a

core component of the study, and can serve the function of eliciting useful side-stories that

might otherwise be lost in more “formal” or “serious” discussions. Since awkward situations

might potentially result in the loss of pertinent information, I directed my research assistants to

play a catalyzing role in furnishing a comfortable and enabling environment for having in-

depth interviews with the female respondents.

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The most important thing was that I gave my research assistants formal lectures on both the

theory and methodology applied in my study so that they could develop their own

understanding and reasoning while posing and directing questions to the respondents in line

with the research topic. I conducted these training sessions in my personal room in the

department. The good thing was that they were eager to learn, and seemed to have had been

rather exuberant about the research project as they themselves would need to propose and

conduct their own research as part of the academic requirements for completing their Masters

course. Their sincerity and inquisitiveness enabled them to have a deft conceptual footing and

comprehensive understanding about the theory and methodology expected in a PhD

dissertation, and they indubitably contributed significantly to my work. I had a long discussion

about the research objectives; main research questions and sub-questions, along with the

overall theoretical framework of the study. Ethical issues of the research were also discussed

and addressed. I reminded them repeatedly to always be friendly with the respondents, and not

to be hurried while asking questions. In total, I spent more than a week training and preparing

the students to be fully-fledged research assistants. As per the general rule of the University for

Research Assistant, I paid them the minimum honorarium commensurate with the work, which

was also in proportion with the remuneration structure of the World Bank funded education

project in my university, excluding food and other travel costs that I myself spent every day

for them. As they were my direct students, I was not very calculative about the precise amounts,

and I offered them whatever I could afford to spare for these miscellaneous expenses.

2.10. Testing the Questionnaire

I primarily developed a questionnaire and discussed each and every point comprehensively

with my research assistances. I decided to go directly to the field to test the questionnaire, and

tried to identify any possible discrepancies related to the different sections of questionnaire. In

fact, a trial and error method was employed during the initial stage of data collection. I

constructed two sets of questionnaires – one was for survey data and the other was for in-depth

interviews, and a checklist was formulated for the case study. When I went to the field I found

some loopholes in certain sections of the primary questionnaire, and I marked those areas to

restructure them to better suit the main focus of the issue under investigation. I revised the

questionnaire twice on the basis of the information gap. Initially, I had several interviews with

the women before staring the survey in order to check and verify the errors in the set of

questionnaire. These “demo” or “dummy” interviews were not taken into account for the study.

I also did not leave the research assistants to conduct the interview alone; I was present beside

53

them to observe the process. One research assistant asked the questions while another one took

down notes. During this time I was observing the way in which they were conducting each

interview session. Sometimes I intervened during the course of the interview as I felt that some

relevant points could be incorporated or included. Critical points were noted down on the spot

immediately. I was sure to ask for permission from the respondents before turning on my

recorder prior to the interview properly. Careful attention was paid to the way respondents

explained their ideas and articulated their views with regard to different issues related to this

study.

I went to the field many times to have regular contact with the respondents with an aim to

stimulate rich exchanges with the primary set of questionnaire. I was working on the formation

of the questionnaire until I became confident enough about the pattern and line of questioning.

Before I started the survey, I completed the preliminary interviews with seven women. The

second phase of the correction of the questionnaire was done while the in-depth interview was

proceeding. At this stage some minor corrections were made as I found some novel points

which were salient to the research focus. In qualitative research, it is a continuous process to

check and modify the research questions and interview checklist according to the reality and

situational context. It is indeed a good idea to formulate a final questionnaire on the basis of

the information provided by the respondents through the preliminary questionnaire, because

new and pertinent information might emerge spontaneously or unexpectedly from the

respondents – something the primary questionnaire might have failed to account for precisely

due to the omission of the crucial aspects in the broader interview checklist.

2.11. Data Compilation, Edition and Analysis

Following each field visit, I wrote something relevant for the study. I felt that it would be

difficult to deal with a large heap of data at the end. I therefore engrossed myself in scribing

and analyzing the data so as to arrange them logically in their relevant sectors and keep them

in good order. When the data collection for the study was over, I began to compile all the

relevant data according to the needs of my analysis, attempting to synchronize it with the stated

research objectives. The data has been categorized in a systematic manner so that the relevant

pieces of information could easily be retrieved. I began the analysis of data according to the

structure of the dissertation. It was very tedious and time-consuming to listen to the recordings

for the transcription of data. In the early stages of sorting data, nearly three hours were needed

for the transcription of one interview. Nonetheless, I successfully transcribed all recordings,

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and made attempts as far as possible to provide a verbatim translation of the quotes made by

the respondents.

I collected volumes of data for the study in order to have all necessary information at my

disposal, and in this regard some of the information received was not needed for the sake of

my analysis. Based on my observations and informal talks with the locals, I managed to take

note of certain important aspects of the situational context such as the social structure and

socioeconomic background of the study area, major occupation of the people of this region,

and their daily lives including my personal experiences in the study area. While my data

analysis was in progress I found some lacunas in the information, and I found that I needed to

bridge the gap by gathering further relevant information from my respondents. This time I only

added specific questions in the questionnaire so as to address the missing point. I put the new

information under a different section of the analysis as per required. I have included some

quotes in the analysis and I used simple translations as far as possible so as to deliver the

meaning in a perceivable manner to readers of various backgrounds and language fluencies. I

made a concerted effort to probe as deeply as I could with the various issues during my analysis.

After writing each chapter, I conducted rigorous editing and fact-checking to correct any

discrepancies and remove irrelevant information in the interests of maintaining the coherence

of the writing in a logical frame.

2.12. Checking Ethical Issues

In social science research, ethics is considered a central issue because “research codes of ethics

address individual rights, dignity, privacy, confidentiality, and avoidance of harms” (Glesne &

Peshkin, 1992; Punch, 1986, cited in Bresler, 1995:29). In this study ethical issues have been

strictly checked because of the commitment of qualitative methodology to a moral

philosophical stance on the research process and on its intellectual outcomes (Bresler, 1995).

The ethical practices I engaged in during the conduct of my study are reflected in the various

phases of data collection processes and the observance of qualitative research norms amidst the

data-gathering process. Before entering the research community, I comprehensively disclosed

my purpose of visiting the respondent women, and explained my objective for conducting

research on their lives (revolving around the theme of neoliberalism, gender inequalities, and

the impact of microcredit programs on poor rural women), and clearly spelled out the rationales

and utility of having interviews with them. I expended my best efforts to dispel confusion and

conflict among the respondents by approaching the issue under investigation in a candid

55

manner. I showed the written set of questionnaires to my research participants and sought their

kind cooperation and permission before proceeding to interview them. Every respondent was

briefed about the aims and objectives of the study.

Every piece of information furnished by the respondents was noted down as it was delivered,

recorded and handled with due care. No distorted or fabricated information was intentionally

or unintentionally added to the original pieces of information provided by the respondents.

When the interview was finished, the recording was played to them so that they could listen to

their voices and verify what they said. Confidentiality or anonymity of the respondents is the

most crucial aspect of qualitative social studies, and must be taken into account. The identities

of the respondents must have guarantees of protection so that the information collected does

not embarrass or cause any harm to them (Bresler, 1995). We assured all respondents that all

information was kept confidential and that it would only be utilized for academic purposes.

Moreover, the name of the respondents was used as per their preferences for the convenience

of analysis and where necessary anonymity was guaranteed. In addition, no documents or

scholarly literature in the entire body of my research work have been used without

acknowledging the authors or sources.

2.13. Limitations of the Study

Actually what would ordinarily have been easy and accessible to my female counterparts had

been a challenging undertaking for me, given that I wanted to conduct research on the issue of

women in the context of a traditional patriarchal and highly sex segregated society like

Bangladesh. Norms and values in Bangladesh typically prohibited women from having casual

conversations with male members of society in an open and friendly manner, particularly with

people beyond their family, kinship, and neighborly relations. These socio-cultural values are

more embedded and observed in rural society, and they are reflected in every action of people’s

lives. Thankfully, I had prior experiences researching on women and development that I did in

the context of rural society in Bangladesh, this provided me with a fresh and positive impetus

for working with poor rural women again.

Moreover, microcredit programs has been shown to be one of the most effective tools to bring

women out of the family precinct and into the public domain through regular interaction with

other female clients of the neighborhood and NGO officials in the local offices with whom they

negotiate loan and microcredit related affairs. Given their prior extensive participation in

microcredit programs, the women were already more or less at ease with being in front of

56

outsiders. Credit made them open, flexible and spontaneous to talk to people. I readily availed

to such an opportunity to develop rapport with the respondent women in the village, and I also

tried to overcome my limitations as a male researcher by recruiting female research assistant

for data collection, which made the data collection process much smoother. I also had the

advantage of speaking to the women in my mother tongue, which helped me to get rich and

relevant information, given that people were more willing to converse in their mother tongue

due to the linguistic insularity.

I faced difficulties interviewing some of the selected women because of their reluctance to

provide candid information, despite having made several visits to their houses. On various

pretexts they avoided being interviewed; such as being busy with household chores or taking

care of their offspring. In such cases, I eventually abandoned my efforts to elicit information

from them, and selected other women for the interview process instead. I made every effort to

identify the respondents who were eager or who appeared informed about issues of microcredit.

Likewise, I prepared my questionnaire to have formal interviews with the NGO staffs.

However, at one point I changed my mind and collected information from them through

informal talks instead because they seemed rather reticent to provide me with relevant

information about the structure of microcredit and other loan delivery/recovery system in a

written questionnaire. Sometimes written versions of the questionnaire may cause confusion

for people in official positions because it is documented and can be preserved or reproduced if

required. In addition, although the direct knowledge of the investigated context is a certain

advantage for the research project, it is likely to produce a passionate identification with the

subjects I have investigated could blur the gaze of the researcher.

57

CHAPTER 3

Theoretical Framework

The chapter begins with an overview of neoliberalism following the theoretical framework of

the study that has been applied in order to explore how the policies and strategies of microcredit

programs of Grameen Bank and BRAC have been working for the development of the poor

women at the grassroots level in Bangladesh. Microcredit as a policy and developmental

intervention tool has incorporated poor women in income-generating activities for their self-

improvement. How poor women belonging to different income categories have been able to

benefit from joining the microcredit programs is the key quest of investigation under the

theoretical underpinnings of Foucaultian notions of disciplinary technology (1977a) and

governmentality (Foucault, 1991).

3.1. Neoliberalism: An Overview

In A Brief History of Neoliberalism, David Harvey (2005) defines neoliberalism as a set of

political-economic practices which proposes that human well-being can best be advanced by

“deregulation, privatization, and withdrawal of the state from many areas of social provision”

(p. 3). Ong (2006) conceptualizes neoliberalism as “a technology of governing that relies on

calculative choices and techniques in the domain of citizenship and of governing. It induces

citizen to self-management according to market principles of discipline, efficiency and

competitiveness” (p. 4) and “seeks to supplant collective, public values with individualistic,

private values of market rationality as the guiding principles of state policy, economic

governance, and everyday life” (Barnett, 2010:2). Neoliberalism refers to the policy

perspectives of economically rational individuals based on market competition, free trade and

foreign investment, and is in opposition to state-run welfare programs and governmental

intervention (King 1987; Hague, 1999, cited in Hoque, 2008). Pierre Bourdieu and Loїc

Wacquant (2001) describe neoliberalism as “the new planetary vulgate” (p. 2) whereas Beck

(2000, cited in Uddin, 2013) describes this term as an ideological “thought virus” (p. 7), which

has been a mode of analysis for the contemporary political economy. Thus neoliberalism

denotes new forms of political-economic governance grounded on the expansion of market

relationships (Larner, 2000), and refers to as the agenda for the promotion of new forms of

identity and subject formation with the individualized values of neoliberal politics manifested

as personal choice, individual responsibility, self-regulation and self-government (Rose,

58

1996:335). The forging of identities – particularly entrepreneurship and individualization – are

linked to new forms of governance and governmentality, often mobilized around the discourse

of empowerment and autonomy (Willis, et. al, 2008).

As a policy framework of the current world order, neoliberalism triggers a policy shift from

Keynesian welfarist economies that guarantee the provision of goods and services to citizens,

towards a political agenda that considers the market to be the most rational and efficient way

to provide these services, which were previously the key responsibility of the nation-states

(Putnam, 2010). As an ideology, neoliberalism rests on five key values: supremacy of

individual and freedom of choice; market security; laissez faire economic policy, and minimal

government (Larner, 2000). As a political project, neoliberalism seeks to roll back state

provisions of welfare and roll out new forms of governance more suited to a market-driven

economy at a number of scales from local to global (Jessop, 2002, also see Rose, 1996; Larner,

2000), which in this case also attempts to exert dominance on the economic policy and the

promotion and expansion of market into new areas of the economy (Arestis & Sawyer, 2004).

Barnett (2004) describes neoliberalism as a “hegemonic project” (p. 4, see also Harvey, 2005),

arguing that neoliberalism is a new variant of a class-driven project of state restructuring in the

quest for a free market and expanded accumulation, and the economic and market philosophy

of neoliberalism is thus premised on a program of polices and governance arrangements that

fosters privatization, market liberalization and encourages more competition.

The term ‘neoliberalism’ is synonymous with a set of economic and policy prescriptions

associated with the ‘Washington Consensus’ (Cornwall, et al., 2008, also see, Griffith, 2006).

The Washington Consensus was devised by John Williamson in 1989, and has been

popularized in both developed and developing world as a widely accepted model for

development (Lee & McBride, 2007) that involved a profound ideological commitment to the

free market and the presupposition of the State as a source of both inefficiency and corruption

(Saad-Filho, 2010; Saad-Filho, 2011). Since the 1990s, revision of some policies has led to the

emergence of a ‘Post-Washington Consensus’ or ‘neoliberalism with a human face’

(Molyneux, 2008) because “the policies advanced by the Washington Consensus are hardly

complete – and they are sometimes misguided” (Stiglitz, 1998a:11). Following the World Bank

policy prescriptions for developing countries that emerged in the 1980s, the last two decades

witnessed heated debates over economic development policy dominated by the so-called

Washington Consensus (Saad-Filho, 2005). The Washington Consensus has a strong logic and

vision in fostering a particular set of development policies (Pender, 2001), and has been

59

accepted as common wisdom on policies of development and growth (Marangos, 2009).

Emerging in the early 1980s as the neoliberal counterpart for developing economies, the

Washington Consensus promoted an ideology and policy of reliance upon market forces, and

of the cutback of state intervention and expenditure to a minimum (Fine & Lapavitas, 2004).

The neoliberal premises of the Washington Consensus imply that the state should be rolled

back in order to focus on some key aspects, which must incorporate “defense against foreign

aggression, provision of legal and economic infrastructure for the functioning of markets, and

mediation between social groups in order to preserve and expand market relations” (Saad-

Filho, 2005: 114).

Most of the developing countries adopted and implemented prescriptions of the Washington

Consensus through the structural adjustment programs, which became the standard policy tool

of the World Bank in the mid-1980s (Mosley et al., 1995). The structural adjustment programs

imply reducing inflation and government expenditure, along with the transformation of

developing countries’ economies towards liberalization, privatization and deregulation

(Richardson, 2001, cited in Slaughter, 2007, also see Gore, 2000), and the phase of this

transformation represents “the interests of affluent elites and financial capital” (Standing,

2000:744). Washington Consensus was labeled as a policy prescription of neoliberal economy

in the developing world (Rodrik, 2002, cited in Marangos, 2009). The World Bank and the

IMF reinforced the relevant policies through conditionalities imposed on poor countries facing

severe balance of payment, debt and financial crises (Saad-Filho, 2011). Many poor countries

of the developing world have been compelled to agree to one or more such programs in the last

twenty years leading to the cumulative imposition of neoliberal policy around the world (Saad-

Filho, 2005) with the Washington Consensus’ premise that “growth occurs through

liberalization and freeing up markets” (Stiglitz, 2002:68). The Washington Consensus policies

were based on a model of market economy in which Adam Smith’s invisible hand works

perfectly (Stiglitz, 2002). The Washington Consensus policies referred to as “neoliberal” are

often based on “market fundamentalism” (Stiglitz, 2002:74; See Cornwall, et al., 2008).

Neoliberal policies have been institutionalized and spread across the developing world through

a number of international organizations meant to aid development of these countries, which

induced many of their member states to comply with their development policies and do the

necessary for the implementation of these programs. The Washington Consensus expressed the

idea of minimum government and free market system as a prerequisite for promoting

development in the developing world (Richardson, 2001, cited in Slaughter, 2007).

60

In the 1980s and 1990s, the Washington Consensus was criticized by academic and civil society

organizations across developing countries due to its inability to explain the economic success

of East Asian countries; the failure of neoliberal policies to deliver significant improvements

in economic performance, and the unnecessarily stringent measures included in the adjustment

programs that typically have highly negative effects on the poor (Saad-Filho, 2005, see Saad-

Filho, 2011). The Washington Consensus even sustained academic attack from within the

International Financial Institutions (IFIs) themselves. Josef Stiglitz, who was chief economist

of the World Bank, was the most influential voice involved in criticizing some of the

assumptions of the Washington Consensus and proposed the ‘Post-Washington Consensus’ as

opposed to the former (Pender, 2001; Saad-Filho, 2005; Ruckert, 2006) as a new vision for

the development discourse (Önis & Senses, 2005). The consensus was mainly based on

Stiglitz’s academic premises of market imperfections that provided the intellectual foundations

to this Post-Washington Consensus (Fine, 2001a). Thus the Washington Consensus has paved

the way for what appears to be a new paradigm for development (Stiglitz, 1998a; Stiglitz,

1998b; Bergeron, 2003) with the emergence of a Post-Washington Consensus. The Post-

Washington Consensus is characterized by efforts to construct an alternative agenda for

developmental theory and policy by integrating social and economic dimensions of

development with particular attention to sustainability and challenging the old state versus and

market dichotomy (Stiglitz, 1998b) that “heavily emphasizes the importance of appropriate

institutions for growth” (Saad-Filho, 2011:328). As a result, the set of economic policies

underlying this new development strategy penetrated into the economic policy agendas of

many developing countries (Önis & Senses, 2005).

Since the demise of the Washington Consensus, neoliberal policy has come to dominate the

relationships between states and markets in developing countries. The policies of privatization,

deregulation and liberalization of markets have given individuals and corporations greater

freedom to innovate and maximize the opportunities for entrepreneurship, completion and

profit (Lee & McBride, 2007). Market freedom increasing through this international

development polices is supposed to be the major backbone of neoliberal development agenda

in this current era of financial accumulation by imposing risk on individual rather than

collective responsibility. The Post-Washington Consensus was about bringing the state and

informal institutions back in to support the market and market-building as a developmental

project under late capitalism fusing the public and private within a heavily institutionalized

pro-market order in which risk to capital is mitigated, and is increasingly shifted to

61

communities and individuals (Carroll, 2012). This way, the capitalist world moved towards

neo-liberalization through a series of rotations and cluttered experiments that really only

converged as a new orthodoxy with the articulation of Washington Consensus in the 1990s

(Harvey, 2005).

The Post-Washington Consensus aimed at addressing some of the limitations of the

Washington Consensus as an emerging global development agenda by situating international

financial institutions and bilateral and multilateral development agencies in a pivotal position

to foster development through participation, poverty reduction and empowerment. Thus the

policy reformation of poverty reduction at the global level under the Post-Washington

Consensus has relevant and practical implications for global political economy in general, and

poverty and inequality in particular (Weber, 2002). Microfinance/Microcredit in this regard

has become a key poverty reduction tool globally since the 1980s. As part of the Post-

Washington Consensus policy framework, microcredit has been the preferred approach for

international development institutions and a central part of national development frameworks,

remaining also a key strategy within the operational portfolios of NGOs working in

development (Weber, 2014) in order to facilitate women’s access to economic opportunity

targeting them as agents of development through such programs (Picciotto, 1998 cited in

Bergeron, 2003). However, some critical viewpoints emerged in the debate about microcredit.

For instance, microcredit can be seen as the new financial technology of the Washington

Consensus’s policies marketed directly to the poor which is used by the Bank as the governing

mechanism of twenty-first-century global capitalism (Flynn, 2007). The discourse that supports

this new financial technology for development would be that “the approach will allow the poor

to be a part of the global marketplace, access consumer goods, and be lifted out of poverty”

(Flynn, 2007:114).

However, there is an important debate about the issue. According to Angelis, for instance,

NGOs place themselves as pivotal forces that act as providers of finance, programs supervisors

and regulators of market, and “consciously and actively promote neoliberal state, business

values and agendas” (Angelis, 2005: 240). Other scholars maintain that neoliberalism implies

that NGOs are authorized by international agencies whose clients are subjected to act in

accordance with the values of discipline practiced by the organizations. As providers of credit,

NGOs in Bangladesh have tremendous power to regulate people’s (clients’) behavior, and

subjugate them to NGO mandates and priority (Karim, 2008), and oblige the clients to abide

by the organizational norms. According to Rankin (2001), through the NGO programs

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neoliberalism has created new ways for rural people to access new routes of capital circulation.

Mohan & Stokke point out that the donor-led proliferation of NGOs has become a technology

for expanding the market beyond its traditional boundaries and serving as agents of imperialism

(Mohan & Stokke, 2000; Harvey, 1989; Harvey, 2003), while other scholars Elyachar (2005)

and Karim (2011) suggest that NGOs are facilitating the process of free market throughout the

world, especially through microcredit programs. Against this backdrop, NGO interventions

with microcredit programs for the promotion of poor women in rural Bangladesh demands a

thorough explanation as to whether market based microcredit programs under the veneer of

neoliberalism actually yields any remarkable benefits for the program participants.

3.2. The Theoretical Approach

Microcredit as a new phenomenon has been a recent developmental discourse and occupies a

significant place in development literatures because of its prominence as a successful

development model which is said to have contributed to remarkable changes in the lives of the

poor people in many developing countries, particularly in Asian and African countries. It is

also evident that this microcredit model of development has not just been confined to its origin

of Bangladesh rather it has been replicated in many poor countries as well as some other

developed countries of the world. Those countries have applied this development intervention

programs and claimed to have achieved outstanding success in poverty reduction. As a

promising development model the success history of Grameen Bank’s ‘minimalism’ has

captured attention of scholars, triggering huge debates regarding whether, how and in what

way microcredit has been an effective development model, along with how and to what extent

it has brought success for the development of poor people in general, and the poor women in

particular. As a consequence, microcredit phenomena have become the centerpiece of the

development debate and political-economy analysis. A wealth of literature on microcredit

(Khandker, 1998; Hoque, 2004; Khandker, 2005;; Molla et al., 2008; Hoque & Itohara, 2009;

Mazumder & Wencong, 2013) reveals that microcredit programs in Bangladesh have been

playing a major role in alleviating the poverty of rural women through self-employment and

income-generating programs. The current academic discourse indicates that microcredit has

been an effective and sustainable development intervention tool for tackling poverty and

reducing gender inequalities as well as for improving women’s bargaining power in the family

sphere through income-generation activities of the target population. The main focus of the

‘minimalist’ microcredit program interventions is to streamline poor women into the

developmental process, aiming to promote equitable and sustainable social progress because

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“the emancipation of women is an integral part of social progress, not just a women’s issue”

(Sen and Dreze, 1995, cited in Fernando, 1997:151).

This groundbreaking social innovation technique, therefore, for empowering poor women by

incorporating them in group-based income generation microcredit programs can be considered

a new orthodoxy in the development discourse (Fernando, 1997). In recognition of the

unprecedented success of microcredit programs, notably in 2006 the Norwegian Nobel

Committee jointly awarded the Nobel Peace Prize to Professor Muhammad Yunus and

Grameen Bank of Bangladesh for their efforts to “create economic and social development

from below” (Daley-Harris, 2009:1). Aitken (2013) argues that this process of development

from below is a conversion of the ‘poorest of the poor’ into financial assets bringing them into

the realm of market. The market based microcredit serves the poor people by incorporating

them into credit practices that are fully ensnared within global financial markets and has been

understood as a particular form of neoliberal accumulation. However, McDermott (2001)

points out that microfinance itself rightly fits within the ongoing neoliberal framework, and is

firmly embedded in the notion of self-reliance and the concepts of free-market capitalist

approaches endorsed by the global North. Keating, et al. (2010) maintain that microcredit

approaches are deeply grounded in the political rationality of neoliberalism and looks for

market-based solutions to a wide range of problems like poverty and unemployment and

develops a justification of individual liberty and responsibility rather than public responsibility

through the application of self-help strategies.

NGOs as providers of development policies and models have been a popular vehicle for

development and are considered legitimate channels for reaching the poor with vital service

deliveries, which thus have gained huge recognition worldwide. At the same time, it has also

sustained fierce criticism from academics and development analysts. They are serving as active

agents for development and change, and hence have been preferred route through which

development programs are designed and implemented. According to Fisher, NGOs are

preferred by the development agencies as an alternative channel to integrate individuals into

market, to deliver services, and to involve local populations in development projects (Fisher,

1997) as synchronizing their purposes, ideologies, polices, and interests with that of the

neoliberal development agendas through widely recognized and extensively used poverty

alleviation strategy of market-based microcredit programs. According to Flynn (2007),

microcredit is one of the most appropriate ways for global financiers to access a previously

untapped market, offering them the opportunities to have both profitable and attractive

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margins. NGOs in this regard function as the purveyors of neoliberalism by following and

applying the policies and strategies best suited to the ideologies of neoliberal development.

According to Rankin (2001), the NGO interventions of microcredit in the context of neoliberal

policy of the global North can be recognized “as a state strategy that constitutes social

citizenship and women’s needs in a manner consistent with a neoliberal agenda” (p. 20).

Against the backdrop of this debate, the study has made an attempt to evaluate the policies and

practices of microcredit programs of two widely recognized NGOs in Bangladesh— Grameen

Bank and BRAC—and the possible effects of microcredit on the lives of the poor women in

rural Bangladesh. Moreover, the study has tried to explore whether poor women’s’

participation in microcredit programs could yield any remarkable outcomes for their families,

and which groups of women in the villages on which the field work has been focused benefit

from participating in microcredit programs. In this case, Foucault’s notions of disciplinary

technologies (1977a) and governmentality (1991) have been applied as an analytical

framework for delving into how women’s economic behavior is regulated by the microcredit

policy of Grameen Bank and BRAC, and whether and how the control of women’s economic

behavior could bring any remarkable outcomes for the alteration of their lives in the context of

rural society in Bangladesh. Moreover, the two concepts of Foucault have been applied in the

study in order to better capture and explain the real image of how the poor women continue to

stay in the microcredit programs complying with the program discipline of the NGOs and

contribute to their development through poverty alleviation and empowerment by spurring self-

entrepreneurship and manage their development in a self-regulated process.

Michel Foucault (1977a) used the term disciplinary power/technology to explicate disciplinary

procedures followed by the agencies, institutions, organization and programs in a particular

social setting, albeit differently. Discipline is a form of power that is exercised over one or

more individuals in order to develop their capacity for self-control, ability to act in concert, and

render them amenable to instruction (Hindess, 1996). It is a technique which functions as

continuous surveillance and sanctions punishment for those at fault. The disciplinary

power/technology operates through hierarchical observation, which is the instrument of

discipline. The goal of this process is to make surveillance an integral part of production and

control (Foucault, 1977a). In this technology the disciplinary apparatus is a single gaze – ‘the

eye of authority’ –which continuously observes everything without the visibility of the subjects

(Foucault, 1977a). But the idea of disciplinary power/technology is not separate from the

concept of governmentality because they are interlinked.

65

Michel Foucault introduced the term ‘governmentality’ in the 1970s in analyzing political

power (Rose, et al., 2006), which was “understood in the broad sense of techniques and

procedures for regulating human behavior” (Foucault, 1997:82). The idea of governmentality

is conceived as a mode of political rationality and a way of governing techniques directed at

managing the self (Foucault, 1991). With the development of liberalism, this form of

governmentality “had become the common ground for all modern forms of political thought

and action” (Rose, et al., 2006: 86), and also has become “a core concept within a wide range

of studies of power, order, subjectivity and resistance” (Larner and Walters, 2004:3). It is

concerned with ordering people and things (Larner & Walters, 2004) by a form of surveillance,

and control over the behavior of the subjects (Foucault, 1991). Governmentality has a more

specific reference to a new way of thinking about and exercising power (Larner & Walters,

2004). According to Foucault, governmentality refers to the “ensemble formed by the

institutions, procedures, analyses and reflections, the calculations and tactics that allow the

exercise of this very specific albeit complex form of power…” (Foucault, 1991:102). By the

term ‘government’, Foucault means “conduct” – or more precisely ‘the conduct of conduct’ –

which is a kind of activity that shapes, guides or influences the conduct of some person or

persons (Foucault, 1997; Gordon, 1991; Lemke, 2000; Lemke, 2013). The “conduct of

conducts” refers to the exercise of power and management of possibilities in which the conduct

of individuals or of groups might be directed (Foucault, 1982). Governmentality is therefore

quite a different form of power; one that seeks to guide human beings (Lemke, 2013). As

pointed out by Lemke, neoliberal governmentality not only harnesses and controls the

individual’s body, but also oversees and subdues the collective body in terms of self-regulation

and control by inculcating neoliberal norms and disciplines in social subjects in order to create

“economic-rational individual” (Lemke, 2000:12).

Being influenced by the Foucaultian concepts of disciplinary power and governmentality, I

have made effort to evaluate the microcredit policies and practices of Grameen Bank and

BRAC. Both the notions of disciplinary power/technologies and governmentality have been

applied to analyze the possible strategies of NGOs in the operation and management of

microcredit for poor women in rural Bangladesh against the background of neoliberalism in

order to understand their strategies for the development of the target groups, and to investigate

how this policy approach influences the financial behavior of the clients and affects their lives.

I have also analyzed social capital in terms of norms, networks and trust in order to explain the

nexus between microcredit programs and the construction of social capital by the poor women

66

themselves. I seek to discover whether microcredit programs have reinforced the existing social

relationships among the rural poor women that contributed to the success and sustainability of

programs. Furthermore, the theoretical background of agency has been applied to analyze the

concept and practice of empowerment so as to understand whether poor women’s participation

in microcredit programs have improved their freedom and autonomy in the households and in

broader society, resulting in the improvement of intra-household gender relationships.

3.3. Review of Existing Literature

Reviewing the relevant literature is the most meaningful way of organizing the idea of research

in a logical frame and functions to demonstrate underlying assumptions behind the general

research questions and helps the researcher identify some gaps in previous research (Marshal

& Rossman, 1995). As explained above, development through microcredit is currently a

contested issue amongst scholars. Current findings suggests that most of the studies focused on

the empowering effects of microcredit on women, and some of them called attention to the

issue of poverty alleviation. The results of those studies are mixed and varied. As such, some

relevant articles on microcredit have extensively been reviewed in order to identify knowledge

gaps in the existing literature.

One study by Osmani (2007) reveals that microcredit extended to poor women to improve their

income earning capacity may increase their ability to enjoy greater power in the household.

Credit enables women to earn cash income for the family, which has immediate effect on

raising their self-esteem as well as their image or social standing in the eyes of others. Thus the

credit is expected to have an empowering effect on women. He therefore concludes that

participation in credit programs leads to the improvement of women’s breakdown position, and

hence greater bargaining power within the household. Women’s bargaining power could be

improved even further if they were able to be fully and independently involved in credit-

financed activities without depending on their husbands (Osmani, 2007).

Goetz and Gupta (1996) give a negative reflection on the effect of microcredit for the

empowerment of women by using a five-level scale ranging from “no control” to “full control”.

These indices of loan control are full control, significant control, partial control, very limited

control and no involvement. By no control they mean women having no knowledge of the use

of loan or contribution in terms of the activities they undertake with the credit; whereas full

control indicates the total productive process including potential marketing activities. They

67

focus on the degree of control that women have over their loan use, which they call the

borrower-woman’s “managerial control” over their loan use.

Goetz and Gupta (1996) also draw the conclusion that most women have a minimal level of

control over the use of loans, which has a damaging impact on the overall welfare of women

so long as repayment is concerned. The transfer of loan control generates tension within the

family, because men who end up appropriating the loans may be unwilling or unable to repay

the loans, thus women may end up being forced to raise money for repaying the loan at the

expense of being hungry or by selling assets. In many cases tensions increased within the

household when women pressured their husbands for money to repay installments, which

sometimes resulted in domestic violence. Their focus is not only on the empowerment, but also

the managerial control of women who rely on loans. According to the criteria they set for the

study, they found that less than 18% of women in the sample have “full control” over the loans

that they borrowed from the programs. Likewise, approximately 39% of women have very little

control or no control at all over the loan use.

Ackerly (1995) used the indicator of “accounting knowledge5” to measure empowerment. His

study on Grameen Bank, BRAC and Save the Children Fund (SCF) considered loan-borrowing

women’s knowledge about accounting for her loan activity. He found that GB borrower

women’s are less involved than SCF borrowers in labor, buying, selling and accounting for

their loans, which significantly impacted empowerment. Thus selling and accounting

participation of borrowing women contributes considerably to the increase of knowledge. His

analysis shows that production alone does not contribute to empowerment; rather, knowledge

and empowerment come through the ability to gain access to the market.

Hashemi et al. (1996) in their study on Grameen Bank and BRAC present the positive impact

of credit on the empowerment of women. They find that credit programs have a significant

effect on all the empowerment dimensions, which they set in their research except for two –

relative freedom from the domination by the family, and politico-legal awareness on the

composite empowerment score. They also came to conclude that regular access to credit often

helps families avoid serious economic distress because the involvement in credit programs does

in fact help to empower women. Credit programs therefore offer women an opportunity to gain

5 In Bengali the term ‘accounting’ can refer to book keeping, but generally it means the calculation for the most

profitable quantities for production, buying and selling account. Also see Ackerly (1995).

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access to economic resources, and thus enable them to overcome gender barriers to wrest back

a degree of control over their own lives.

Pitt et al. (2003) in their study examined the effects of male and female participation in group-

based microcredit programs on various indicators of women’s empowerment for three

programs by Grameen Bank, BRAC, and BRDB’s RD-12 project. They set ten factors for the

measurement of empowerment to evaluate the differential impact of men and women’s

participation in microcredit programs. Those are all variables (factor 10), purchasing,

resources, finance, transaction management, mobility and network, activism, attitude and

husband’s behavior, family planning and parenting issues. They find a positive correlation

between women’s participation in microcredit programs and their increasing empowerment.

After participating in such credit programs, women experience a greater role in household

decision-making. They have greater access to financial and economic resources, increased

social networks, and bargaining power in comparison with their husbands and enjoy more

freedom of mobility (Pitt et al., 2003).

Schuler and Hashemi (1994) examined the effects of the participation of women in rural credit

programs on contraceptive use and on variables related to women’s empowerment. They

conducted their study on two programs of Grameen Bank and BRAC. They reveal that

participation in credit programs empowers women by strengthening their economic roles in the

family. The findings of the study also suggest that Grameen Bank programs influence their

borrowers’ contraceptive use by promoting family-planning values. BRAC programs also

increase women’s mobility through their attendance in the regular meetings that help equip

women with skills and to become more self-confident. Schuler and Hashemi (1994) set five

control variables in order to distinguish between the effects of participation in credit programs

and the effects of other variables that are believed to have influenced women’s contraceptive

use in rural Bangladesh. Those variables are respondents’ age, number of years of formal

education, their housing type as a dummy variable and access to family planning services.

Amin et al. (1995) conducted a similar type of study as Schuler & Hashemi (1994) on Grameen

Bank, BRAC and DRDB in Bangladesh, presenting a positive result on the participation of

poor rural women in income generating activities. Participation in the program is associated

with increased levels of contraceptive use (and thereby lowering the fertility rate) and an

increase in the level of empowerment. They also find that household income improves when

the number of loans increases, resulting in the greater physical mobility outside the home. This

69

also provides women the opportunity to talk to people outside of immediate family relations,

an increase in the quantity and quality of household items purchased, greater participation in

health-related decisions, and an increased attendance at political meetings. The study also

reveals that participation in microcredit programs strengthened both the economic security and

welfare of the poor women, raising their level of confidence allowing for greater empowerment

and self-reliance. Thus these three organizations – GB, BRAC and BRDB – through their

programs contribute to the expansion of women’s empowerment.

Schuler et al. (1996) in their ethnographic study explore the issue of domestic violence against

women; their economic and social dependence and the possible role of Grameen Bank and

BRAC in reducing the vulnerability of women to violence. Their case studies suggest that

women who earn modest amounts of income and have some assets of their own are more likely

to become victims of violence as compared to those who have nothing of their own and are

completely dependent on their husbands. When women begin to earn some independent

incomes on their own and enhance their mobility in the wider society, conflict situations

between husband and wife can potentially develop. This means that the greater accessibility of

women to credit-operated programs and their implication in income-generating activity, the

greater their level of violence against them is observed (Schuler et al. (1996); though the levels

of violence against women may vary from case to case.

Pitt and Khandker (1998) evaluate the effects of three group-based credit programs of GB,

BRAC and BRDB’s RD-12 in Bangladesh. The findings of their study demonstrate the

significant effects of GB’s microcredit loans in improving the literacy of girls. Mothers drawn

into self-employment activity may lead to a forced compensation by her daughters to engage

in household production such as child care and food preparation. They draw the conclusion

that credit is a significant determinant of many crucial outcomes such as household

expenditure, non-land assets held by women, male and female labor supply and boys’ and girls’

schooling. Moreover, credit provided to women was more like to be effective than credit

provided to men to influence these outcomes.

Kabeer (2001) conducted a study on the Small Enterprise Development Project (SEDP) in

Bangladesh. The major finding of her research is on the gendered division of labor among male

and female clients of SEDP. Kabeer (2001) sees that women are restricted to peripheral

‘female’ occupations close to household such as paddy husking, poultry-raising, and

homestead-based works; whereas male clients are more likely to engage in external activities

70

of commerce and other works outside home. Later she comes to a conclusion that this gendered

occupational structure suggests the observance of purdha norms which regulates and constrains

women’s appearance in public spaces and restricts their ability to transact freely in the market

place. She finds that adherence to purdha is a voluntary faith in status-norms rather than the

direct manifestation of male control over women. She finds that access to credit enhanced their

voice in household decision-making, indicating that expenditure patterns within the household

were differentiated by the gender of the loan borrowers (Kabeer, 2001).

Rahman (1999) gives a contradictory view regarding the potential effects of microcredit on

rural poor women. As revealed by his research in Bangladesh, he speaks of a hidden transcript6

conceived by Grameen Bank staffs. Targeting women as potential credit-clients is in fact a

strategic choice by GB because they are apparently facing increasing loan-repayment problems

when dealing with the male clients. The GB staffs and borrowers recognize that women are

often found in vulnerable positions due to their limited physical mobility and culturally-

patterned behavior such as shyness and passivity. This ethic is closely connected to the

responsibility of social collateral7 for instance, collectiveness, mutual trust and social

reputation. He argues that social collateral as a strategy for ensuring the timely repayments may

actually escalate violence towards female credit-borrowers.

Bernasek (2003) claims that there has been some improvement in women’s social status and

their empowerment within the family owing to women’s involvement in Grameen’s credit

programs. Women now contribute more to the family financially, exercise more power in the

household decision-making, and have relatively more control over important areas of their lives

such as contraceptive use, ownership of land, and so forth. He further argued that microcredit

has greater potential for improving women’s socioeconomic status and empowerment through

lifting their families out of poverty.

Amin et al. (1998) find a positive relation between NGO-membership and women’s

empowerment. This may indicate that their increased contribution to the economic survival of

their families is directly correlated with their increasing empowerment. This also reinforces

6 This concept was originally conceived by James Scott (1990). Hidden transcripts provide a means for the elites

to conspire over the affairs and make secret decisions. On the other hand, it provides a means for subordinates to

covertly express their antagonism toward the dominant and strategize resistive actions while overtly complying

with the dominant outside of their hidden transcript. 7 Rahman (1999) defines social collateral as an organized social pressure from group members as security for

repayment.

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credit related movement of the women outside their families and their participation in NGO-

promoted endeavor to raise consciousness about microcredit and female empowerment. They

show that women have become more confident, assertive, intelligent, and are more conscious

of their rights due to participation in NGO credit-programs. These NGO programs both satisfy

women’s financial needs, and also works to empower them and their families.

Mahmud (2003) confirms the positive effect of microcredit programs on empowerment.

Female participation in credit programs increases their access to resources like self-

employment and women’s mobility and access to certain public spheres such as NGO offices

and healthcare centers. She argues that the positive effect of participation in credit program

remains small since women’s access to more remunerative wage employment and their

mobility in hitherto male-dominated spaces has not increased. She further argues that women’s

potential for exercising agency is enlarged due to their participation in microcredit programs if

they actively engage in intra-household process, which plays a part in determining welfare. Our

qualitative study (Al-Amin et al., 2013) on Grameen Bank and BRAC shows that microcredit

programs have little impact on the empowerment of poor women in Bangladesh, and

microcredit interventions alone cannot empower women due to a patriarchal social structure.

The effect of credit is therefore not remarkable unless concomitant interventions are made at

different levels of women’s social life.

Jahiruddin et al. (2011) mainly focused on the effect of microcredit on poverty. They argue

that poverty among a section of credit borrowers can in fact worsen under circumstances, such

as a delayed return from investment in microenterprise, suffering financial shock at a primary

stage of the business, or the anticipation of loan money for meeting emergency needs. They

claim that microcredit has led a section of borrowers in certain socioeconomic conditions to

experience continuous pressures for on time repayment, creates uncertainty and anxiety about

the future, along with the potential social embarrassment of being loan defaulter rather than

guaranteeing economic benefits to poor women. Mazumder and Wencong (2013) in their

quantitative study explore the positive relationship between poverty and poor women’s

participation in microcredit programs. They assess the impact of credit programs by comparing

different situations such as the change in income, assets development, standard of living, and

the socioeconomic status before and after their involvement in credit programs. Their study

reveals that microcredit tends to have an impact on household income and minimize poverty

to a reasonable extent.

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Hoque’s (2004) quantitative study looked at the relationship between microcredit and poverty

alleviation by using a unique data set about BRAC. The analysis revealed that BRAC

microcredit programs has a negligible impact on the reduction of poverty for loan-borrowing

households. The results of the regression analysis suggest that the effects of microcredit on

consumption at household levels are insignificant. Similarly, Khandker’s (1998a) study based

on a household survey of three programs of Grameen Bank, BRAC and Rural Development

Project 12 (RD-12) in Bangladesh argues that microcredit has the potential to significantly

reduce poverty. Microcredit programs were found to be important for rural women who were

previously excluded from the public domain, but who sought entry into gainful economic

activity in the job market. He also argued that women who participated in the microcredit

programs also increased their net wealth and status within the household, and improved the

lives of their children. Another quantitative study by the same researcher (Khandker, 2005)

examines the effect of microfinance and poverty alleviation by using panel data from

Bangladesh. He claims to have resounding programmatic effects on people accessing

microfinance, especially female participants. On the basis of his statistical results, he concludes

that microfinance contributes to poverty reduction amongst poor borrowers in the program

villages, raising per capita household consumption. Karim (2008) conducted a study from a

different theoretical approach in order to explore the workings of microcredit on poor women’s

lives in rural Bangladesh. In her ethnographic study focusing the effects of microcredit on

gender relations in rural Bangladesh, she examines how microcredit programs of Grameen

Bank, and other three NGOs instrumentally appropriate rural women’s honor and shame in the

furtherance of capitalist interests. She also explores how poor women’s involvement in

microcredit programs accelerated the expansion of globalization and neoliberalism in

Bangladesh by appropriating the pre-existing forms of shaming by NGOs for the collection of

loan-repayments from the credit borrowers.

There seems to be a departure from discourse on poverty alleviation, empowerment, gender

relations and women’s fertility practices, to a focus on social capital formation by NGO

microcredit-programs intervention. Dowla (2005) in his study examines how Grameen Bank

creates social capital by constructing horizontal and vertical networks that fostered a new level

of social trust to solve the collective-action problem of poor people’s (lack of) access to capital.

This study focused on the positive side of microcredit, which seems to furnish a single-sided

explanation on the issue, while the alternative “dark side” of social capital is not explicated,

which the author himself candidly admits. Uddin’s (2014) ethnographic study on Grameen

73

Bank and BRAC examines how group-based micro-lending contributes to the strengthening of

women’s social capital at local level. He argues that there exists an ambiguous relationship

between women’s involvement in group based microcredit programs and the facilitation of

social capital. He suggests that group lending mechanisms functions as an entry route for

female borrowers to access the credit market, but NGOs appropriate this mechanism as an

instrument for promoting their governance and disciplinary power over loan-borrowing women

in order to secure their capitalist interests through the timely collection of installments.

From reviewing the existing literature on the effects of microcredit on poor women’s economic

and social life, both optimistic and pessimistic outcomes can be garnered. In some cases study

findings remain controversial as varied methods are applied, thereby producing differential

outcomes. However, the major findings of the past researches do not adequately reflect the

actual impact of credit on the loan-borrowing women for various studies consider focusing on

the different issues from different point of views that might have overlooked certain occult

facets of microcredit programs, producing one-dimensional perspectives. As a result, there may

be different argument on the performance and effects of microcredit on poor women’s lives in

the context of rural society in Bangladesh. Likewise, the success of microcredit programs has

drawn much attention from many researchers in a wide range of areas such as women

empowerment, poverty alleviation, social capital formation, group-based lending in

microcredit programs, women’s bargaining capacity in the familial decision making process,

impact on female education, and so on.

Doubt and controversies shroud the outcomes of some studies on microcredit in Bangladesh.

Some of these studies have been conducted by a host of NGO staff, or by consultants hired by

NGOs and international aid agencies (Karim, 2008). Against this backdrop, I have focused my

study on the unseen faces of microcredit programs that most of the studies have omitted from

consideration. Therefore, my research attempts to fill in the lacuna of the existing literature by

looking at the issue from a different approach. My position as a researcher in this regard to

unravel the underside of the microcredit programs which is a crucial aspect of development

studies.

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CHAPTER 4

Socioeconomic Background and Lending Processes of Microcredit

in the Study Area

Every geographical region has a distinct social and cultural background in which people are

born and brought up. The area where my study was conducted was no exception. Therefore, it

is relevant to depict the socioeconomic condition of the study area for the purpose of

understanding the situation of poor women living in that particular geographical location. This

section of the dissertation provides the social background of the study area along with the

socioeconomic profile of the respondents. In addition to this, the developmental trajectory of

microcredit in the context of neoliberal regimes in Bangladesh will be discussed along with

environment of the study area. Similarly, how the lending processes of microcredit programs

of Grameen Bank and BRAC have been going on in the program villages is briefly explained

as an introduction to the analysis of data in the subsequent sections dealing with different issues

pertinent to the study.

4.1. Social Background of Study Area

Sylhet is one of eight major Divisions with different administrative zones called District and

Upazila. Division is the highest tier of local administration which is named after the major city,

Sylhet for instance, that serves as the administrative headquarters of the Divisions within its

jurisdiction, while District is sub-divided into Upazila. Under an Upazila there are Unions that

consist of several villages. The typical village in Bangladesh consists of a several

neighborhoods, locally known as para8, which in turn are composed of groups of homesteads

or bari9 (Chen, 1986). The location of Sylhet is in the North Eastern region of Bangladesh

bordered by India in the North and the East. It is a landlocked region that boasts of beautiful

natural landscapes. There is a vast swathe of marshland in the greater Sylhet region, with the

remaining areas comprised of hilly terrain. There are a large number of tea gardens in the

mountainous areas of Sylhet located in different places of the region. From time immemorial,

8 In the rural area a neighborhood is called para which consists of several homes in a row. Sometimes it is named

after the family name of a reputed person. But currently the traditional system has been eroding due to changing

social structure in Bangladesh. 9 In the traditional culture of Bangladesh bari is an important unit of identity and status. Each bari consists of

several houses in which people live in collective way. Most often people live in a bari who belong to the same

gusthi (lineage). A group of households or families may comprise a gusthi (Chowdhury, 1982).

75

Sylhet has been known for its traditions, customs and culture enriched with different identities.

As a tea-producing region, the eminence of Sylhet is widely celebrated across the country.

Bangladesh exports tons of tea to many markets; accruing for the national exchequer important

economic contributions. In addition to producing natural gas, the lion’s share of tea is produced

in Sylhet. Bangladesh also has a long history of migration and a reliance upon overseas

remittances (Miah et al., 2014). Thousands of Bangladeshi expatriates originate from the

greater Sylhet. The largest number of people from Sylhet living abroad is in the United

Kingdom (Gardner, 1995). This region plays a vital role in the national economy of Bangladesh

through contributing large amount of remittances to the nation’s foreign exchange reserve

(Hossain et al., 2011).

The two villages of Sylhet Sadar Upazila10 named Chatal and Kazirgaon have been selected as

study areas. According to the Union Parishad11 official record12, the total number of population

in Chatal village is around 1638, with the ratio of male to female inhabitants being 617 and

1021 respectively, while the total number of population in Kazirgaon village is approximately

1150, with male and female population being 600 and 550 respectively. The total number of

households in Chatal village is 243, while in Kazirgaon it is 115. The statistical information

used here from the official survey of Chatal and Kazirgaon Union Parishad officials on their

own initiative; it is not the result of the national population census. I have used the up-to-date

official statistics provided by the Union Parishad. Every Union Parishad has its own statistics

on the population and total number of households, which were mostly accessible and reliable.

The limitation of accessing the national census data is that village level data was not readily

available. This is why Union Parishad conducted demographic surveys on the village on its

own accord. However, it is worth mentioning here that Chatal and Kazirgaon are two separate

villages situated far from each other. Chatal village is a bit near the city whereas Kazirgaon is

somewhat further away.

10 It is the third tier of administrative as per rank remaining under the District and all Unions and villages are under

the Upazila. The Upazila has a direct control over the Unions in terms of resource allocations and overseeing all

local level administrations. 11 It is the lowest tier of administration that maintains the local governance and allocates resources and

development funds with the help of Upazila administration. 12 Union Parishad conducts census in its own initiative for keeping the up-to-date information about the population

living in that area. The census done by the Union Parishad is the presentation of current socio-demographic profile

of the population.

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The average rural society in Bangladesh – particularly Sylhet – is preconfigured by distinct

norms and customs. The society is bounded by a traditional social structure characterized by

strong kinship relations, a mixture of joint and nuclear family structure, and close-knit social

ties among the rural community. Empirical evidence indicates that the joint familial structure

is gradually eroding and shifting into nuclear form due to economic reasons. One of the

underlying reasons for this is because living in a joint family is costly and in many instances

appears to be difficult to manage when the number of dependents is increasing, while the

number of income-generating persons is limited. Besides, society is also changing due to the

influence of modernization, which indelibly contributes to the shift away from joint family

structures. Traditionally, women rarely visit public places without putting a veil on their faces,

and without a male person being with them. This is not atypical in rural Bangladesh. People in

this region are far more religious, and women tend to retreat from “male domains” of society

due to the practice of stringent purdah norms. Purdah is a complex institution that entails

restrictions on women’s physical mobility and dressing. It denies women certain opportunities,

and at the same time confers upon them the social distinction of a protected group (Cain, 1979).

Women are never seen visiting any rural market place as it is considered the public domain of

men. Thus they are secluded from the public male sphere. Market activities are the exclusive

domain of men. Men do all the shopping for household items and all the major selling including

both agricultural and nonagricultural produces (Chen, 1986). Women are naturally expected to

remain in the “female-dominated” sphere of homesteads, and are only permitted to move about

at specific times or for specific purposes (Chen, 1986) such as visiting relatives or any other

places in the vicinity for a particular occasion. They are not allowed to appear in public or

converse with unacquainted people without good reason. Thus talking to such persons is often

considered a social taboo, and is never seen positively. The most rigid societal rules force adult

girls or young ladies to remain away from strangers and talking to them, and when such social

norms are transgressed, it may result in stigmatization or insults by members of the community.

Field level observation and experience confirms that even the female children in rural areas of

Sylhet typically feel shy when appearing before unacquainted persons. Their prying into the

affairs of unacquainted persons is suppressed by the societal rules hampering their spontaneity

to mix with people from different walks of life, which in turn fosters a narrow emotional world

and prevents their full integration into the wider society.

There is an amalgamation of different religious communities in the region. Muslims comprise

of the majority population, Hindus as the second major minority, with Buddhist, Christian, and

77

other indigenous communities such as Khasia and Manipuri constituting the remainder. The

vast majority of people in rural areas are engaged in predominantly agricultural occupations.

The village depends on rice cultivation for subsistence, which reflects the true image of most

of rural Bangladesh (Cain, 1977). The major crop produced in this region is paddy (rice). In

addition, some people also grow vegetables in the homestead and on land near homes, but this

is not the common picture of the area. It is worth mentioning that land in rural areas is highly

unequally distributed; three-quarter of the landholders are comprised of small and marginal

farmers who have less than 2 acres of land and own only 20% of the land (Malhotra & Kabeer,

2002), while large farmers having over 10 acres of land constitute 2% of the landholders, but

own more than 20% of land (Rose, 2002). Sylhet is not atypical in terms of the ownership of

land by different categories of people because rural society in Bangladesh represents the strong

features of asymmetric land distribution, which is the backbone of rural economy.

However, in the social structure of the study area it is difficult to find any women working in

the field like their male counterparts. Societal norms customarily do not allow women to

undertake and accomplish any work that is not assigned for them. There is acute division of

labor and some works are strictly feminized, and hence are considered to never fall within the

spectrum of men’s work. Women usually labor on household activities, spending most of their

time caring for children and doing other work in the home space. Cooking is undoubtedly the

most important task amongst all of these chores. Women’s work is seen in the context of a

system of male dominance, which manifests as a form of patriarchy. The major occupational

groups in the region comprises of people—are agricultural workers, fisherman, CNG auto-

rickshaw driver, battery propelled three wheeler driver, rickshaw puller, fish trader, mason,

hawker, vegetable vendor, grocery shopper, tea staller, and a number of the people are

automobile mechanics, and so on. Some people are seen to work in automobile workshops

close to the city as assistants. In some cases the occupation of the people may change depending

on the variation of the seasons13. A vast majority of male persons in this area are engaged in

these occupations, while female population is involved only in household activities as

housewives without any exceptions. A negligible number of the women claimed to have been

engaged in making mats with local raw materials as a secondary career because mat-making is

typically a feminized occupation. While the production of mats falls within the responsibility

of women, men primarily engage in the selling of the goods in the marketplace. Essentially, it

13 People are often seen to work in different sectors according to the availability of work. Some people change

their occupations due to seasonal variations or opt for a different occupation for temporary reasons.

78

means that women are the owners of production, but they are not the controller of the finances

accrued from selling their produce as the control of money typically remains in the hands of

men.

A gendered division of labor is therefore culturally structured and embedded in the psyche of

individuals, keeping many women away from much of the work done outside the household

precinct. Women tend to specialize in some specific types of work that keeps them close to the

homestead. The kind of tasks women are commonly seen to perform include: paddy processing

and winnowing, paddy boiling and then drying in the sun, house cleaning, floor sweeping, cloth

washing, and cultivation of vegetables14 in the homestead for meeting household needs.

Women’s participation in direct economic activities seems to be rare in the context of the rural

setting in this region, with the only exception being women who have no persons capable of

earning income for supporting the family15. In these circumstances, they are forced to do any

work for their survival regardless of strict social norms. This is obviously evident in several

female-headed households16 lacking in workable persons to provide for the family. In such

households women have no choice but do work, which places them in an equally unenviable

position in society. Despite poverty and the social vulnerability of those women, they cannot

defy purdah because braving purdah norms for the necessities of life is tantamount to flouting

the religion, which often ends in tolerating the social stigmatization and chastisement. Women

in this rural setting have to maintain proper decency, dress code, and religious customs.

Educational opportunities in this region are ostensibly harrowing. Government-led primary

education policy declares emphatically: ‘universal primary education and education for all’,

but a reverse-reality is found in the study villages. A remarkable number of children are

observed to have dropped out of school before they have finished the primary level of

education. Parental outlook towards female education is not positive. In the poorer sections of

society female education is often discouraged due to want of money as well as the lack of

14 In rural areas people grow vegetables in their homestead or on nearby land. They do it only for satisfying the

familial needs rather than for commercial purposes. It is often observed that people sell their excess produce in

the market after meeting their own requirements which does not necessarily mean that production is engaged in

for purely commercial purposes. 15 Extremely poor families typically have no able-bodied breadwinner. As a result, they often undergo severe

economic hardships. 16 The number of female-headed households is not known. I found some women who were the heads of the family

because of being widowed and having no income earning persons in the family. They are bound by the reality of

maintaining their families all by themselves. Female-headed households are typical examples of acute social

vulnerability encountered by poor women.

79

proper awareness about the benefit of education to enhance their social and economic

development. Furthermore, they consider female offspring as an encumbrance for the family,

thus seeking to marry them off as soon as they reach puberty. In addition, there is also a

disparity between the male and female literacy rate in this region. The total literacy rate is

approximately 51%, while the male and female literacy rate is about 54% and 49% respectively

(BBS, 2011). In the two villages there are only two standalone primary schools and one

Madrasa17 to provide basic primary education for the children of these regions. Besides, there

are a few BRAC operated elementary schools in the areas for providing some basic education

to the children of poor families. Children from more affluent families do not typically go to the

NGO operated schools in the belief that only children from poorer families go to these schools.

There appears to be the impression amongst wealthier families that going to such schools may

demean their social status. There are several religious institutions such as mosques in the

villages, given the predominant social and religious context of the people in this locality. Given

that only a minority of individuals professes Hinduism as their faith, most of the villages do

not have temples for their worship; only 1 exists in the one of villages I researched.

The social organizations that engage in social development and voluntary action appear to be

absent in these areas. No sports or youth club exists in the villages. One of the key reasons for

the lack of clubs and community development organization under local people’s own initiatives

lies in the heart of the problem of poverty, difficulties in sustaining their lives, and scarcity of

available time for recreation. The only source of amusement for people is television; with this

common mode of entertainment being found only in affluent households. Men usually spend

their leisure time in the local market place or in front of tea stalls gossiping with fellow

members of the neighborhood. Rural people usually have leisure time in the afternoon as most

of the activities are normally done in the early hours of the day such as labouring in the paddy

field in the case of men, while women finish most of their tasks before mid-day. The people

who are involved in non-agricultural activities usually do not have any specific hours for their

entertainment. In many cases, if men have no work they end up staying idle at home. The

supply of electricity in the village is most often out of reach for the poor, while people who

possess the financial wherewithal may access such services. Safe drinking water is derived

17 Referring to an educational institution that provides religious education to students. In the context of rural

society and even in the context of greater Bangladesh students from poor socioeconomic background generally

get admitted to Madrashas for obtaining education. Though Madrasha education is endowed with equivalent value

as modern forms of general education, students who graduate from such institutions appear to have limited access

to the job market due to societal variation and perceptions of people about this type of education.

80

from singing deep and shallow tube-wells by the local people in their community. Most of the

poor people report having used water from the tube well of the next-door neighbor.

Furthermore, the communication system in this area is relatively good compared to other

remote rural regions of greater Sylhet given that the area is close to the divisional city. The

available mode of public transport in this region is CNG auto-rickshaw, rickshaw, and vans.

Country boats are seen to ply in the various water bodies during the rainy season.

There are a number of NGOs working for the development of poor people; particularly poor

rural women. As mentioned previously, the more notable ones include BRAC, Grameen Bank,

ASA (Association for Social Advancement) and FIVDB (Friends in Village Development

Bangladesh) in common. All of the NGOs stand for equal opportunities for women, and thus

offer microcredit programs for these poor women18 to lift their lives out of poverty with the

explicit agenda to empower them through self-help projects. Amongst all these NGOs,

Grameen Bank and BRAC are more common, while ASA and FIVDB also have gained

prominence for offering credit to both men and women for the purchasing of motor vehicles or

floating other business propositions with their clients under small and medium

entrepreneurship (SME) projects. I also learnt that people take loans from ASA and FIVDB to

send prospective individuals in the family abroad in the quest of better future for everyone.

4.2. Socioeconomic Profile of Respondents

This study was done in one of the typical rural societies in the Northeastern region of

Bangladesh that comprises a significant portion of the population mired in chronic poverty. By

categorizing loan-borrowing poor rural women into three groups such as the-lower income

group, the middle-income group, and the higher-income group, the average monthly income

was calculated on the basis of the household’s income contributed by any able-bodied person

in the family. From the survey data it is found that around 36% of households has an average

monthly income of about tk. 7719 (around $100, here $1 is equal about 77 Bangladeshi Taka),

while 44% of households has an average monthly income of Tk.15430 (about $200), whereas

only about 20% of households has an average monthly income of Tk. 29739 (approximately $

386). The monthly income of the middle income groups is double than that of the lower income

groups, whereas the income of the higher income groups is almost two times of the middle

18 According to NGO officials, they target the poorest of the poor women as their program participants, but in

reality the fact is otherwise in the sense that they prefer poor women who most likely possess the financial

capability to repay the loan within the stipulated time. For the convenience of realizing the effects of credit on the

life patterns of the poor women I have categorized them into different income groups.

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income groups and about fourfold of the lower income groups. The information regarding the

family income of the respondents was based only on the total family income contributed by all

income-generating members of the households including women; although female members of

the family typically do not have any direct financial contributions to the household income as

compared to the other male members of the family.

The following chart19 (Figure 3) presents the educational status of poor women in the study

areas. The survey data indicates that slight more than half are only able to place their signarure,

and possess some accounting knowledge that they learnt from NGO staffs, which in many cases

is mandatory for every women in order to collect and deposit money. Around 38% of women

have completed primary education, while a negligible portion of them (around 6%) has finished

their secondary level of education. Few women have a secondary education to their credit, and

an equally insignificant percent of respondents have completed an undergraduate-level of

studies. This is generally indicative of the overall educational scenario of Bangladeshi poor

women in rural areas.

The pie chart20 (Figure 4) provides the information about the main occupational configuration

of the respondent women in rural Bangladesh in which the study was done. The occupational

configuration more or less corresponds to the typical type of work done by the “female section”

of society.

19 Source: Adapted from field interview data. 20 Source: Adapted from field interview data.

52%

38%

6%2% 2%

0%

10%

20%

30%

40%

50%

60%

Education of respondents

87%

2%6%

5%

Occupation of respondents

Housewife Handicraft Teacher Others

Figure 3: Education of respondents Figure 4: Occupation of respondents

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The survey data indicates that around 87% of women were homemakers21 while only a small

portion of them were engaged in making handicrafts amounting to about 2%. Around 6% of

women were school teachers, which is an exception to this category because it was found that

some primary school teachers were involved in borrowing loans from Grameen Bank that does

not represent the general picture of poor women’s occupational structure in rural Bangladesh.

The teachers were not the inhabitants of the village; they live in city and come to the village

school to teach.

The average length of women’s involvement in microcredit programs was about two years.

Around 58% of women were involved in the microcredit programs of either Grameen Bank or

BRAC for more than two years, 24% for well over seven years. And 10% were involved in

these programs for more than twelve years, while this figure was about 4% for those clients

who received loans from NGOs for well over seventeen years. The same proportion (4%) had

been involved for more than twenty-two years.

Bangladesh is a densely populated country with about 1, 222 people living in per square

kilometre (WB, 2015), while the number of people living in per square kilometer in Sylhet

Sadar Upazila is 1, 528 (BPD, 2015).

22The histogram reflected in Figure 5

reflects the averagne family size of

the respondents. According to the

Bangladesh Population and Housing

Census, the average family size in

Bangladesh is 4.4 (BBS, 2011a) and

the same in Sylhet Sadar Upazila is

5.68 (BBS, 2011b), while in the

study area the average household

size has been calculated to be around

6.5, which is much higher than the national average. Perhaps the main reason for the larger

household size might be due to the social and economic structure of rural society. In the rural

areas in Bangladesh poor women tend to prefer sons, thus contributing to the increase of the

21 Women feel comfortable designating themselves as housewives. In rural society large sections of women are

engaged solely in household activities; only in very rare cases do they have secondary occupations. I also found

a small percentage of women who made handicrafts, but this was found to be a secondary occupation. 22 Source: Adapted from field survey data.

Figure 5: Average family size of the respondents

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family size. It should be noted that preference for sons is a more or less common demographic

preference of the people among all sections of population in the country. However, rural people

still consider the son as the most important asset for the family from the perspective of

economic and food insecurity.

In the context of Bangladesh, boys are more valued than girls in terms of their contributions to

the household both in tangible and intangible ways. Moreover, when girls reach puberty they

are married off to another family and leave their parents’ home to live permanently in their

husbands’ abode, while boys remain in the parent’s family home even after marriage. Getting

a daughter married off is both a financial burdensome and an onerous duty for parents since

marriage costs a lot in the form of transactions, dowry, hospitality management, and giving

gifts to the groom’s relatives. In some cases it also happens that parents have to pay dowry

money to the daughters’ husbands on different occasions and under various pretexts. As a

result, poor women prefer to have son, deeming daughter a burden for the family. On the other

hand, boys are treated as the most important contributor and asset to the family. This kind of

judgmental perspective sheds lights on the subjective dimension of poverty of the rural poor.

Women consider sons as a potential income-generating person in the family that contributes to

gathering food and as providing necessary support to meet the basic needs of family members.

Girls are not expected to fulfill this role due to their socially-insecure status and vulnerability

compared to boys. Thus women suffer insecurity in the domains of income, food, and other

items essential for maintaining life. In rural Bangladesh male children are valued more than

female children (Islam, 1983), and sons in this regard are perceived as economic assets for

special consideration (Mizan, 1994). Bangladeshi parents have indeed tended to show a strong

and sustained preference for sons (Fraser, 2010).

4.3. Development Trajectory of Microcredit in Bangladesh

Bangladesh came into being as an independent state in 1971 after ceding from Pakistan. As a

newly-born war-ravaged state, Bangladesh came to be known as a test case for development.

Consequently, the international donor community has been a development partner of

Bangladesh (Nag and Salimullah, 2006). Subsequently, Bangladesh became one of the member

countries that adopted the Bretton Woods Institutions — sponsored structural adjustment

program (SAP) and joined the BWIs, World Bank and International Monetary Fund (IMF) —

on August 17, 1972 (Bhattacharya and Titumir, 2001). Developing countries seeking loans

from these institutions are required to adopt structural adjustment programs as a precondition

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for the transfer of funds (Sparr, 1994), and the governments of those countries are obliged to

reshape their economies to become more market-oriented (Sparr, 1994: Maclean, 2007). The

poverty alleviation programs of the World Bank started in the early 1970s had created

widespread discontent due to rising poverty and inequality, resulting from a failure of the

“trickle-down” effect that allegedly characterized modernization processes. As a result,

development NGOs enjoyed a favorable environment in terms of funding and policy support

(Muhammad, 2015) in order to combat poverty and inequality. Bangladesh as a poverty-

stricken new state appeared to be an ideal site and breeding ground for NGOs (Muhammad,

2015) because channeling funds through corrupt government agencies most often did not reach

the targeted beneficiaries of the programs. Therefore, NGOs have become the best conduit for

transferring development funds and policy instruments.

In addition to other social development programs, BRAC as the single largest NGO in the

world began microcredit program in 1974; while Grameen Bank started its journey towards

development as a project in 1976 (Muhammad, 2009: Muhammad, 2015, also see World Bank,

1998; Barai, 2013; Matsui and Tsuboi, 2015). The project later turned into the Grameen Bank

in 1983 when it was transformed by government legislation into an independent bank

(Muhammad, 2009; Barai, 2013; Lewis, 2016). Since the 1980s, microcredit/microfinance

programs expanded rapidly in Bangladesh following the group-lending model of Grameen

Bank. Since Grameen Bank successfully developed and implemented the concept of credit free

of collateral (Maclean et al., 2007), it has led to the proliferation of microcredit institutions

expanding the microfinance market in Bangladesh (Barai, 2013). As a result, Bangladesh has

emerged as the “cradle of the microcredit movement” (Develtere and Huybrechts, 2005: 165),

and has engendered a flourishing microcredit market. Since the early 1990s, the NGO sector

has become highly polarized, with Grameen Bank and BRAC being the major players in the

realm of microcredit business (Muhammad, 2015), microcredit has been placed as an

alternative to the dominant developmentalist paradigm of poverty alleviation (Muhammad,

2009). During the 1990s the NGO sector witnessed exponential growth (Davis, 2006) under

the framework of neoliberal development policies (de Aghion & Morduch, 2005. The rapid

growth of NGOs was therefore led by the prominent NGOs—GB, BRAC, ASA, and Proshika

(de Aghion & Morduch, 2005).

Bangladesh as a fertile ground for microcredit did not reach its current level of development

overnight. Rather it took time to reach the pinnacle of success after many obstacles, including

encountered strong resistance in the context of rural society. The history of launching NGO-

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initiated microcredit programs like Grameen Bank and BRAC was not a straightforward one

due to staunch opposition from various interest groups and members of local communities –

some of which manifested in the form of violent resistance (Lewis, 2016). It initially proved

challenging to convince people about the benefit of microcredit. Religious fundamentalists and

other influential local personalities spread the rumor that microcredit is unlawful23 (haram).

That is why before entering the villages with microcredit programs, NGOs need to carefully

consider the local people’s sentiments, and take the cultural context into account so as to avoid

any awkward situations or misunderstandings. It is worth mentioning here that in the very

initial stages of developmental interventions in rural Bangladesh, NGOs faced great opposition

and sustained scathing criticism from locals and religious fundamentalist mainly because

microcredit programs facilitated bringing women outside the household periphery and into the

domain of the public, which is strictly prohibited given the sociocultural and religious context

of rural Bangladesh. At the very outset of introducing programs for female empowerment,

religious zealots alleged that NGOs are indoctrinating people and imposing Western culture

and ideology on women, thereby capitalizing on their poverty. As a result, both the employees

of these organizations and its beneficiaries have become the targets of attack in different ways

(Naher, 2005). Now there has been a remarkable improvement in this situation, though sporadic

examples of opposition to NGO programs are still reported in certain remote parts of the

country.

4.4. Microcredit in the Context of Study Area

NGO officials in the study area are of the opinion that the prior opposition faced by the NGOs

be seriously taken into consideration before they begin to float microcredit programs in a new

area. At the same time, they focus their attention on the local social and cultural landscape in

an attempt to understand the attitude of the people, which paves the way for an amenable social

climate to complement their main agenda of microcredit.

My study area in Sylhet is no exception to this rule. As a result, both Grameen Bank and BRAC

carefully and consciously took the social context of the program village into special

consideration, and commenced the programs in the village in order to reach their goal without

disturbance or opposition from influential local persons. BRAC started its program in

23 From religious point of view borrowing money on interest is haram (unlawful). Islamic religion deters people

from offering and receiving interest because the Holy Quran states that Allah has made interest haram and

business halal (lawful). By doing business people can make profit but cannot accept interest, which is a commonly

held view of the Muslim population.

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Kazirgaon village in 2001 while Grameen Bank embarked on the same in Chatal village in

1988. Both Grameen Bank and BRAC follow and maintain similar strategies when offering

programs in a new village given the feasibility and viability of the programs based on the

socioeconomic conditions of a particular village.

When introducing microcredit programs in remote rural settings, the manager of microcredit

programs seek out the person who has the most clout amongst the poor in the community, and

also take cognizance of the significance of building rapport with the local influential persons

from the affluent classes that are in the helm position of society. One might question why the

program managers look for people with influence or leadership traits in them, and what benefits

are accrued to them? One of the main reasons is because rural society is tightly bounded by

strict social and cultural norms that by and large do not allow outsiders to access the community

as freely as the insiders. Consequently, people external to the area often seek interaction with

those people who can give them shelter and support, which implies that power in the context

of rural society in Bangladesh lies with the affluent who own land and other material properties.

Indeed, other groups of people at the lower strata of society also possess a form of invisible

power that they can exert on people within their own circles. Power in this regard is amorphous,

dynamic and fluid; possessing magnetic characteristics to attract other people – less so as a

form of economic power and more so as social power. As Foucault (2008) explains, power

flows through the capillaries of the social body, and “power relations are rooted deep in the

social nexus” (Foucault, 1982:343). Hence power operates in such a fashion whereby it

percolates from top to bottom. Notably, poor people most often do not manage to mobilize and

vocalize their opposition to NGO programs. Some members of the local communities and

interest groups are reportedly involved in criticizing NGOs-related programs (Lewis, 2016);

these include people such as the religious leaders and local touts.

4.5. Microcredit and Its Lending Processes

This part of the analysis mainly focuses on the lending processes of Grameen Bank and BRAC

in the program villages where the study was conducted. It is found that the delivery of

microcredit to poor women follows certain organizational procedures, which is strictly

maintained by the management authority of microcredit programs. NGOs are said to be going

to the doorsteps of the poor – particularly poor women – to fulfill their immediate needs with

credit facilities that are not easily accessible to them. Unlike NGOs, most government

organizations often fail to adequately administer in such poverty alleviation initiatives because

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of incapacity of the state to meet the needs of the growing population living under crippling

poverty and severe social insecurity. Grameen Bank and BRAC have been offering credit to

poor clients in the study villages in a similar fashion. Microcredit as the vehicle of development

is seen to have gone to poor people after passing through different administrative tiers, starting

from the regional head office, area office, and local head office, and then to the local field

office, apart from corporate office situated in the capital.

Generally there is a zonal/regional head office in or near the District town, which is responsible

for coordinating the entire area and branch offices situated in different places under the greater

region according to the vantage of the programs. There is a zonal/regional manager in the

regional head office and area and branch manager in the regional offices. Every manager of the

area office is accountable to the manager of the regional office. In the parallel manner, there

are local field offices situated in different villages where microcredit programs are in operation

managed by either Grameen Bank or BRAC – which was the case of my study area. Local field

offices of Grameen are designated by the office administration as local center whereas BRAC

local office was known as the village organization (VO). A manager at the local head office

(which also may be called local coordinating office in my own terms) maintains several villages

under which there remains one or more field officers or center managers called by Grameen

and program organizer designated by BRAC. The number of mangers in the local offices

actually depends on the size of the microcredit programs. Branch office managers are the

coordinators of the field office who guides and oversees his subordinates working at field level

who are vested with the responsibility to vet the suitability of clients to whom loans are

disbursed, and to collect installments from the female borrowers, amongst other

responsibilities. The branch manager does not deal directly with the loan delivery and

repayment affairs; rather he is responsible for scrutinizing the feasibly of the program village(s)

before starting the microcredit programs, the subsequent delivery of credit to the borrowers,

and evaluating whether the operation of credit in a particular social context is financially and

programmatically viable. In certain emergency cases he has to visit the village in order to settle

any critical issues reported by the local center managers or program organizers.

In every village there are several centers. The actual number of centers is determined by the

number of clients in the village and the demand for credit. Local centers act as a meeting ground

for the clients and field officers, which is especially useful for the collection of installments. A

chief selected by the NGOs from amongst the poor credit clients runs the local center. The

chief’s suitability is assessed in terms of her competence in dealing with fellow clients and

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potential leadership qualities. The field officers/supervisors negotiate directly with the center

chiefs24 as opposed to individual credit clients as this ensures that some level of distance is

created between the institutional lender and the individual borrower. Centers are split into

different parts for program expansion when the magnitude of loans sought by the community

becomes a bit larger. One of the significant reasons underlying the division of centers in

different locations of the village emanates from the motive of the program managers whereby

they first consider the financial sustainability of the programs, before factoring in the wellbeing

of the poor. When the influence and social standing of NGO staff improves in the village and

reportedly in association with other senior loan-borrowing women25 and those with clout26,

they usually search for potential locations to hire another center, which helps them to locate

the households of credit-clients in the vicinity. Their motive at the same time is also to bring

new areas under the coverage of microcredit program, thereby serving twin purposes to

increase the outreach of credit and to strengthen their influence among the poor.

The most interesting point is that NGO officials select center chiefs (who must be poor women)

based on some specific criteria in which age, intelligence, leadership capacity and familiarity

of the lady with the neighborhood is pointedly considered, and placed as the top priority. The

center chief is responsible for organizing and integrating all other borrowing women under her

own center. The major role she plays with regard to microcredit is to forward the primary

recommendation for the allocation and collection of loans to and from other borrowers.

Moreover, the center-chief has been endowed with certain degree of authoritative power to

identify women suitable for the credit facility, and is entitled to recommend them to the local

field officer for endorsement of the loan disbursement. The center-chief is above all a person

in a position to influence other women under her charge in a seemingly intangible way, and

she plays a key role as an intermediary between the loan-receiving women and the local field

officers.

24 It is found that field workers of NGOs in the study villages do not directly deal with each and every client unless

there are difficulties in recovering installments. All center chiefs are responsible for managing the installment

amount from the clients belonging to different groups. NGO staffs have reported that approaching individual

clients are psychologically draining. 25 Senior members of microcredit programs could help rope in prospective clients because of her positive social

standing amongst other poor women living in the community. 26 NGO workers maintain good social relations with the local elite in order to safeguard their own interests. They

seek cooperation from influential local people in order to buttress their social image in the village. One of the

main reasons for this is because when NGOs fail to recover the loans disbursed, the local elites assist in pressuring

the defaulting clients to repay the loan.

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In some cases the center-chief acts as an agent recruited by the NGO officials in order to

facilitate their work in the village. Around 21% of the respondent women in Kazirgaon village

reported that the center-chiefs are agents of BRAC, and serve the interests of the NGOs at the

expense of poor women. Similar allegations were also brought by 18% of the respondents of

Grameen Bank in Chatal village. The most notable benefits the center-chiefs have allegedly

obtained from the NGO officers are the relaxation of rules for repayment of installments – more

leeway is given regarding repayment deadlines. Approximately 29% of the borrowing women

reported that while the center-chief pressurized other women to have their repayment-

installments ready before the due date, she never bothered about her own installments, though

she is busy collecting installments from other clients.

In the local loan center in Kazirgaon village, it was observed that clients were attempting to

negotiate settlements or extensions regarding their loans. Unfortunately, the center-chief was

unrelenting. She insisted that her intercessions to the field officer about the problems of the

defaulting women might be in vain. Her first priority seems to be about securing her own

position, before assisting other women under her charge if it falls within her ambit and remit.

This delicate “checks-and-balance” relationship is maintained by the center-chief in her

negotiations with field officers on behalf of the credit-defaulters. Since the center-chief lives

in the same locality, she needs to maintain reciprocal relationships with other women, while at

the same time functioning as an agent of the microcredit programs with the lump sum

facilitates27 provided by the NGO. As a result, she faces a dilemma about the maintenance of

relationships between client women and field officers.

27 It is reported that NGOs offer rent for hiring the house of center chief, which is considered as one of the attractive

financial advantages for poor women who acts as a center-chief. Moreover, the repayment rule for the center-

chief is reportedly more relaxed, and she is afforded a slightly larger loan size than usual. All credit borrowing

women are aware that NGOs keep the center-chief under their control by offering this sort of benefits

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Figure 6: Organizational structure of Grameen Bank, BRAC and Microcredit programs

Source: Developed from field work materials

The diagram above shows the official location of Grameen Bank and BRAC-operated

microcredit programs in two separate villages that I selected for conducting the study. At the

top are the location of these two NGOs in the city and the outskirt of city, whereas the middle

position reflects the location of area offices situated in the suburbs, and the branch offices

located near the villages. The bottom two diagrams indicate the villages where both Grameen

Bank and BRAC have local centers, each headed by a center-chief. The clients of microcredit

programs do not have to go to the main office for loans, but they are not always able to receive

loans from the local centers. In this case, they have to go to the branch offices in order to make

a surety bond with the NGO-authority while borrowing loans with the husbands or other male

members of the family. NGOs do not offer loans to any poor women without their husbands,

who typically act as guarantors of the loan. I also found one center-chief of BRAC local center

in Kazirgaon who worked as the agent of an insurance company in the city. She also had to

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take husband28 with her in order to receive a loan from the branch office. She claims that she

can go to the city by herself without any male person accompanying her without defying

traditional purdha norms, but for undertaking a loan she is obligated to take her husband with

her. This phenomenon does not exemplify the actual social reality of poor women in my study

area. In a majority of the cases rural women must have a male persons accompanying them

while visiting any public domain without exception29. This is the general lending structure of

microcredit programs of the two NGOs operating in the village.

28 Women have to take their husbands with them when requesting for loans because NGOs do not offer loan to

women without their husbands, who act as guarantors. This phenomenon exemplifies the patriarchal social

structure and reinforces it through the operational processes of microcredit programs. 29 There are some women who are compelled by sociocultural norms to visit certain places alone conforming to

the strict purdha norms. Sometimes age is a determining factor for a woman can visit a particular place with or

without a male person accompanying her.

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CHAPTER 5

Microcredit and Social Capital Formation: Why and What For?

Social capital refers to relations, reciprocity and trust amongst individuals by which they can

accomplish common objectives through coordinated actions. Therefore, the idea of social

capital has come into prominence as an important component for achieving equitable and

sustainable development, participatory democracy, grassroots empowerment, and effective

government (Harriss and de Renzio, 1997; Abom, 2004). The concept of social capital has also

become central to debates about development (Evans, 1996; Harriss and De Renzio, 1997;

Woolcock and Narayan, 2000), which has increasingly been used in the analysis of transitional

economies (Fine and Lapavitsas, 2004) as an important aspect of public policy (Montgomery,

2000). In this context, NGO initiatives of group-based microcredit programs have become an

accepted intervention tool for the development of poor communities in many countries of the

world (Anderson et al., 2002) given its recognition for its proven capacity to build social capital

for developmental purposes. The collective identity, norms, and networks of reciprocity form

the nucleus of social capital, which is considered to be the most important aspect of

development. Thus the building of social capital through microcredit systems has opened up

new avenues for development to solve the collective-action problem of poor peoples’ lack of

access to capital (Dowla, 2006). Therefore, group-based microcredit program is considered an

effective policy instrument for fostering and enforcing social capital in the community (Uddin,

2014). This chapter intends to investigate how group-based microcredit relates to the

construction of social capital, how this affects the lives of the poor credit clients, and their

ability to act collectively in rural Bangladesh.

5.1. Social Capital Theory in Development Discourse

Social capital has been postulated as the missing link in development (Harriss and De Renzio,

1997; Grootaert, 1998; Fine, 1999; Grootaert, 1997, cited in Ito, 2003; Swain, 2003;

Schuurman, 2003; Fine and Lapavitsas, 2004; Fine, 2008; Titeca and Vervisch, 2008: Portes

and Landholt, 2000, cited in Maclean, 2010); a potential remedy to the social ills caused by

neoliberal policies aimed at getting prices right (Portes and Landholt, 2000, cited in Maclean,

2010). Social capital debate is deemed consistent with the notions of neoliberal (Harriss, 2002)

and Post-Washington Consensus agendas (Fine, 2001b) that non-market interventions have a

role in resolving market imperfections (Fine, 1999). Where markets cannot operate perfectly,

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social capital can correct it by potentially intervening to enhance the working of the market and

enriching non-economic behavior or outcomes. This is because social capital is seen as a path-

dependent response to market imperfections (Fine 1999; Fine, 2007; Fine, 2008). Social capital

in this regard refers to new ways of making society computable and governable (Walters, 2002)

and a mechanism to tackle market failure caused by imperfect information and risk

(Grabowski, 1998; Moore, 1999; Dasgupta, 2000;; Szreter, 2000). Some critics also argue that

social capital is a neoliberal concept that has been used to sell neoliberalism and manage its

cost (Harriss, 2002; Fine, 2001b).

The conceptual popularity of the notion of social capital accelerated in the late 1990s (Portes

and Landolt, 1996; Woolcock, 1998; Farr, 2004; Fine, 2007), drawing the attention of social

theorists. Some of these theorists sought to apply the concept across all the social science

disciplines (Woolcock & Narayan, 2000; Fine and Lapavitas, 2004; Fine, 2008: Field, 2008;

Uddin, 2014). Social capital as a neoliberal development paradigm has found momentum in

the scholarly literature (Fine, 1999; Fine, 2001b; Fine, 2007; Fine, 2008) that supports

development through collective-action by accessing a common pool of resources. Social

relationships in this sphere are a resource that can facilitate access to other resources

(Bebbington, 2002). Policymakers also increasingly rely on theories of social capital for

advancing the development interventions that mobilize local social networks in the alleviation

of poverty (Woolcock, 1998, Rankin, 2002; Das, 2004). Therefore, a common consensus has

emerged amongst academics and development practitioners that social capital can significantly

contribute to the alleviation of global poverty through the utilization of trust and norms of

reciprocity generated by local forms of association (Rankin, 2002).

The contemporary social capital theory emerged in the 1980s, and comprised the work of the

three prominent figures: Pierre Bourdieu, James Coleman and most prominently, Robert

Putnam (Portes, 1998; Field, 2008, Smart, 2008). Bourdieu is commonly accepted to have been

an early purveyor of social capital and he placed considerable emphasis on the understanding

of social class, while attempting to differentiate social capital from cultural and symbolic

capital (Fine, 2007). Bourdieu developed the concept of social capital during the 1970s and

1980s, whereas Coleman’s endeavor of melding sociology and economics under the banner of

rational-action theory influenced both social scientists and policymakers. The concept of social

capital in its current form owes much to Robert Putnam, which attracted wide publicity (Field,

2008), and sparked a heated debate about the potential of social capital in development. There

are important differences between the scholars in terms of their definitions and manifestations

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of the idea of social capital since each of them offers a different level of analysis (Smart, 2008).

Bourdieu offered a description about the structured sets of values and ways of thinking which

forms the ‘the habitus’ (Bourdieu, 1977). He gave weight to this view by using the metaphor

of ‘cultural capital’, indicating that groups having distinctive social position enjoy certain types

of cultural tastes and preferences compared to others in any given society (Field, 2008).

Bourdieu (1977) initially defines social capital as the capital of social relationships, which will

provide useful support in cases of necessity. This is a capital of honorability and respectability,

and is often indispensable for attracting clients in socially important positions that may serve

as currency in a political career. He deviated from this initial position with the refinement of

the former idea of social capital that came as: “social capital is the sum of resources, actual or

virtual, that accrue to an individual or a group by virtue of possessing a durable network of

more or less institutionalized relationships of mutual acquaintance and recognition” (Bourdieu

& Wacquant, 1992: 119). Thus social capital lies in the structure of social relationships in

different levels and forms. Moreover, a person willing to possess social capital must be related

to others who are the actual sources of his or her advantage as social capital indicates resources

gained though membership in networks (Portes, 1998). Bourdieu treated the concept

instrumentally because he noted that people intentionally cultivate certain relationships in the

interest of gaining mundane personal benefits (Bourdieu, 1985, cited in Portes, 2000).

Therefore, social capital can seldom be acquired without the investment of some material

resources and cultural knowledge in the possession of individuals that enable them to establish

relationships with others (Portes, 2000). The structural forms of social capital are conceived

for a variety of instrumental and normative considerations. While instrumental ideas of social

capital are routines that create an effective culture in the process of cooperative or collective

undertakings, normative ideas in the forms of values, norms, attitudes, and beliefs create an

effective culture through the feelings of trust and solidarity that encourage cooperative or

collective undertakings (Uphoff, 2000).

James Coleman was another influential exponent of social capital. According to him, social

capital functions as a kind of resource as involving the reciprocity between individuals and the

wider networks of relationships that are managed by a high degree of trust and shared values

(Coleman, 1990). Coleman (1990; 1998) defines social capital in terms of its function having

a variety of different entities in which two elements are in common: namely, some aspect of

social structure, and the ability to facilitate certain actions of individuals remaining within the

structure. He (1990; 1998) argues that social capital is created when persons change their

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relations in such a way that facilitate action. Coleman (1990) therefore suggests that social

capital is “embodied in the relations among persons” (p. 304). Social capital in this case is an

important resource for individuals that can affect both their ability to act and their perceived

quality of life (Coleman, 1990:317). Therefore, social capital as a community characteristic

facilitates or inhibits the innovative and/or risk-taking behavior of individuals or groups

(Westlund and Bolton, 2003).

Social capital owes much to Robert Putnam (Field, 2008, Rankin, 2002). He has stood out as a

widely recognized proponent of social capital after the publication of his widely celebrated

book, Making Democracy Work (Putnam, 1993). He defines social capital as “features of social

organization, such as trust, norms and networks that can improve the efficiency of society by

facilitating coordinated actions” (1993:167). The essence of the social capital theory suggests

that people’s engagement in networks and associational life help them develop a set of common

values and set of practices of beliefs that can become “moral resources” (Putnam, 1993: 169;

Putnum, 1994:10) whose stock increases rather than decreases through proper use; or could

also be depleted if left unutilized (Putnam, 1994). More precisely, social capital contributes to

collective action by increasing the norms of reciprocity and facilitating the flows of information

and developing the mutual trust among the participants which acts as an outline for future

cooperation (Putnam, 1993). Putnam asserts that the continuous exercise of community norms

and organizational culture is the mechanism that sustains the production and formation of social

capital (Putnam, 1993, cited in Abom, 2004).

But Putnam’s concept of social capital has been modified over a period of time, in which he

(re)defines social capital as certain features of social life such as networks, norms and trust that

facilitate participants to act together in a more effective manner to pursue common goals

(Putnam, 1996). Although there is some variation in the refined definition of social capital, the

fundamental ingredients have been retained in the new definition. The shared objectives in this

regard is important for society as well as individuals for developing a sense of collective

identity for achieving common goals that enable the members of the association to achieve

better outcomes through engaging in joint efforts. In other words, trust and norms of reciprocity

enhance “participants’ taste for collective benefits” (Putnam, 1995: 67, cited in Rankin, 2002).

Therefore, according to Putnam (2000) “the core idea of social capital theory is that social

networks have value…social contacts affects the productivity of individuals and groups” (p.

18-19).

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Putnam (1993) classified social capital in two basic forms – bonding and bridging – while other

typologies introduce vertical and horizontal dimensions that facilitate or impede the capacity

of communities to mobilize social networks (Putnam, 2000: 23; also see Rankin, 2002:4). The

horizontal forms of social capital are commonly found in communities where horizontal ties

are strong and norms of community participation within communities exist and tend to generate

more equitable and strong democratic composition (Putnam, 1993). Vertical social capital on

the other hand tends towards serving the interests of a particular group, which is characterized

by patron-clients relations that inhibit development (Putnam, 1993). A typology of social

capital has also been developed since the publication of Putnam’s book (1993), which

introduces the concepts of bonding, bridging and linking social capital (Woolcock, 1998:

Gitten and Vidal, 1998; World Bank, 2001a, Szreter, 2002). Bonding social capital refers to

strong solidarity among the people of similar demographic features (Putnam, 2000; World

Bank, 2001; Field, 2008), while bridging social capital refers to horizontal connections between

people of different backgrounds (World Bank, 2001a; Putnam, 2000; Das, 2004; Titeka and

Vervisch, 2008; Field, 2008). It is claimed that these features of social capital have important

implications for economic development and poverty reduction (Woolcock, 1998). Woolcock

(1998) defines social capital as “the norms and network that enable people to act collectively”

(p. 226) for achieving mutual benefit. And both bonding and bridging forms of social capital

potentially benefits the poor (Das, 2004). Social capital is said to foster a bottom-up approach

to poverty alleviation (Woolcock, 1998), which is crucial for long-term development and

raising the standard or living for the poor (World Bank, 2001a; Das, 2004). In this sphere the

process of connections and cooperation helps people improve their lives (Putnam, 2000;

Woolcock, 1998). Putnum (1994) argues that social capital is a “public good” (p. 10) which is

“under-produced by society” (Woolcock (1998:156), while at the same time claiming that trust

as a form of social capital is a by-product of other collective endeavors such as participation in

civic associations. People participating in a group develop intra-group norms and feels moral

obligations through personalized networks of exchange, which is what Simmel calls

“reciprocity transactions”(Woolcock, 1998:161).

There are also different ideas and concepts of social capital, which mainly expanded upon the

notion of social capital as explained by Robert Putnam. Among others, Fukuyama (1995)

defines social capital as “the ability of people to work together for common purposes in groups

and organizations” (p. 10). Similarly, Bowles and Gintis (2000, cited in Durlauf, 2002) suggest,

“social capital generally refers to trust, concern for ones associates, a willingness to live by the

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norms of one’s community and to punish those who do not” (p. 460). Social relationships are

therefore a key component of social capital (Adler & Kwon, 2002) that is further solidified

through regular interactions and intimate relationships taking place in certain social and

cultural settings. Farr (2004) conceptualizes social capital as a network of associations,

activities and relations that bind people together through certain norms of reciprocity and trust

which are essential for collective actions or goods by way of other forms of capital. Likewise,

the World Bank’s (1998, cited in Staveren, 2003) research project on social capital and poverty

defines social capital as “the institutions, relationships, the attitudes and values that govern

interactions among people and contribute to economic and social development” (p. 1). This is

a broader concept of social capital encompassing some crucial components that indispensably

constitute social capital. Therefore, social capital enables people to organize themselves to

solve local problems (Paldam, 2001) for a common goal achieved through coordinated actions.

Therefore, how microcredit as a development intervention tool has brought poor people –

particularly poor women – in a forum for collective-action to achieve the common objectives

of sustainable development through the fostering of social capital calls for a deeper

investigation.

5.2. Microcredit and Social Capital: Drawing the Link

Social capital is regarded as an important dimension of microcredit process (Woodworth,

2008). As the pioneering articulator of microcredit, Professor Muhammad Yunus is convinced

that it “gives high priority on building social capital” (Woodworth, 2008:1). Microcredit is

small amount of money given as a loan meant for poverty alleviation of the poor, which is

disbursed through self-selected groups based on trust and without collateral. The interventions

of microcredit is increasing in number and size in transitional economies with the principal

objective being to raise incomes and broaden financial markets by providing financial services

to poor people – particularly poor women – who otherwise lack access to capital markets (de

Aghion and Morduch, 2000), and have difficulty obtaining credit from Banks (Anthony, 2005).

Mohammad Yunus (1999) started the Grameen Bank of Bangladesh in 1976 with the

philosophy of making capital available to poor women by forming small groups of borrowers

from the same community to serve as a collective source of collateral to compensate for the

individual’s lack of financial collateral. In the 1990s, the World Bank and other donor agencies

opted for microcredit programs as a standard policy intervention for poverty alleviation that

enables poor people to access to financial services, and has sought to contribute to gender

empowerment in developing countries (Binswanger and Landell-Mills, 1995; Mayoux, 2001,

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2002). Social scientists and development practitioners have pinpointed that the forms of capital

in the common development theory (namely natural, physical and economic) lack a crucial

component popularly known as social capital that indicates networks of relationships, norms,

and nurtures values that encourage collective action (Bastelaer, 2000).

However, microcredit programs constitute groups for the provision of loans to poor clients

under certain terms and conditions that they have to comply with to stay in the programs. This

group-based policy of microcredit programs is considered important for creating and enforcing

the social capital of the community participants. Provision of credit though self-selected groups

and joint responsibility is the main pillar of microcredit programs, and it ensures its

sustainability and propagation through client-participation in the weekly repayment meetings

(Stiglitz, 1990; Holt and Ribe, 1991, Yaron, 1994; Larance, 1998, Anderson, et al., 2002;

Dowla, 2006). The set of formal rules and norms are the fundamental base through which

microcredit programs regulate public life in society which the World Bank calls ‘macro level

social capital’ (Quinones Jr. & Seibel, 2000).

The microfinance market is overcoming the challenge of financial constraint faced by poor

communities through utilizing the social capital generated by the poor clients themselves to

ensure the success of the lending programs despite having no financial collateral. Grameen

Bank’s microcredit program as proposed by Professor Muhammad Yunus’ innovative idea has

proved that providing credit exclusively to the poor can be a viable form of developmental

intervention (Quinones Jr. & Seibel, 2000). The microfinance programs are currently

dominated by the ‘financial self-sustainability paradigm’. Within this paradigm women’s

participation in group-lending processes is promoted as a key strategy for increasing financial

sustainability and poverty alleviation by drawing on the idea of social capital. Promoting

women’s empowerment automatically strengthens this social capital through the group-lending

mechanism (Mayoux, 2001). The existence of social capital in the forms of local networks and

norms of association is recognized as a good substitute for financial collateral in the selection

of beneficiaries of credit delivery and recovery (Mayoux, 2001). Group-based microfinance is

therefore considered significantly beneficial for women given its contribution to poverty

alleviation and empowerment through mutually interlinked virtual spirals (Mayoux, 1998).

Microcredit adopts a dual approach in the process of its loan delivery mechanism: group

lending and credit, which is ‘a strategic research site’ (Woolcock, 1998, cited in Maclean, 2010)

for a connection between social capital and economic capital (Maclean, 2010). In the provision

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and operation of microcredit, small self-selected groups are formed that guarantees the

economic collateral because credit is disbursed without collateral. Loans are offered to a group

on its own liability and all members are jointly liable to pay the loan in time, ensuring the

timely recovery of loans. The group function is based on solidarity, reciprocity and trust.

Therefore, this system of loan-delivery techniques ultimately contributes to reducing the

transaction costs of the organization as members themselves collect repayment installments at

weekly gatherings in the center chief’s house, making the provision of minimal credit

financially viable (Johnson and Rogaly, 1997; Ledgerwood, 1999). The success of microcredit

programs is measured in terms of the outreach and repayment rate (Johnson and Rogaly, 1997;

Ledgerwood, 1999), and the microcredit institutions are said to be financially viable on the

basis of the savings and interest rates that can cover the cost of loan, and administration without

the need for subsidies (Yaron, 1994).

In addition, it has been argued that social capital embedded in the local social setting is a good

starting point for fostering women’s development by incorporating them in developmental

initiatives where they are the ‘entrepreneurs of themselves’. Women’s access to credit removes

certain social barriers and enables them to participate in developmental activities. Women’s

traditional role in the family and community ensures that they have strong networks that can

potentially be harnessed for the promotion of development. Besides, women’s indigenous

survival strategy is equally essential as well as important for catalyzing development by

utilizing the inherent potentiality and value of women’s social capital in order to promote

income-generation through credit-loan provisions. Microcredit programs help by recognizing

women’s role in development without necessitating their engagement with (typically unpaid)

domestic labor (Molyneux, 2002). Providing loans to groups of poor women can allow

microcredit programs to increase repayment yields even from clients who would ordinarily

have been deemed too risky. This group-lending mechanism is often lauded as the key to the

success of the programs (de Aghion and Morduch, 2000). Thus group-based programs are

claimed to build social capital through strengthening women’s economic and social networks

(Mayoux, 2001).

Moreover, microcredit programs have used existing social structure or formed women’s self-

selected groups in order to ensure the timely repayment of loans through peer pressure, in which

the problems of asymmetric information is a distinct disadvantage (LIanto, 1990; Hoff and

Stiglitz, 1990, cited in Yaron, 1994). Similarly, improving the access of the poor to basic

financial services aimed at promoting economic growth and poverty reduction is an explicit

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objective of the World Bank, and market-based microcredit programs have achieved

remarkable success by offsetting the borrower’s lack of collateral through such a group-

lending mechanism (Gallardo, 2001). In this context, the main attempt of this part of the

dissertation is to elucidate whether microcredit programs foster social capital amongst poor

rural women, and how this affects the life of those credit-clients. Similarly, a particular focus

is given on whether the process of social capital formation contributes to the development of

poor women in the sense of collection action and solidarity by group memberships in credit

programs, and finally how networks and collective-action facilitate mutual cooperation

amongst group members by accessing to credit facilities.

5.3. Construction of Self-selected Group and Delivery of Credit

Academics and policy analysts generally consider the lack of access to credit as hindering the

development of the poor. Given this, the pioneer of microcredit Professor Muhammad Yunus

has argued that credit is a human right (Yunus, 1986; Yunus, 2004; also see Hudon, 2008; Roy,

2010; Gershman & Morduch, 2014). Drawing upon this philosophy and by treating women as

the poorest of the poor, microcredit has primarily targeted them for credit-loans. When a

commercial Bank loan is not viable for poor women, NGOs are at their doorsteps offering

credit without collateral or through social collateral. When women are alone, they cannot get

access to credit; but when they band together with other women in a group they can and have

access to credit. Indeed, in the recent parlance of development it has become fashionable to

mobilize local social networks for the alleviation of poverty (Rankin, 2002).

Microcredit programs of Grameen Bank and BRAC maintain some preliminary processes prior

to the allocation of credit to women. It is observed in the study villages that microcredit

programs primarily select the target group on the basis of the organizational criteria. In this

case the key point of consideration is the characteristics of the clients. It means that microcredit

programs generally prefer clients who have the ability to repay the loan. According to the field

workers of the programs, the client’s current economic and social condition is the main criteria

for the assessment of loan-suitability. How this is done, and who does it is a basic question for

investigating the issue. It is found that in the study villages that microcredit programs select a

center-chief for every center in the villages on the basis of their personal choices (see details

in chapter 4). As a member of the program herself, the center chief acts as a bridge between

the field workers and the local clients involved in the programs. She also holds responsibility

for organizing and maintaining all the groups of women under her center, and is in charge of

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identifying and certifying members who are eligible to undertake a loan. The formation of

women’s self-selected groups is a general process of microcredit programs, without which

loans are not usually offered. Every group consists of five to six self-selected members.

Women’s economic interests therefore compel them to be self-motivated when forming groups

in order to satisfy their needs of credit. The formation of groups by the clients in a self-selected

process is a sine qua non for every member before borrowing loan. One of my respondents of

Grameen named Tanjina (age 23) was interviewed in her residence at Chatal village on May

14, 2015. She said about the formation of groups for borrowing loan:

“When we are in need of loans, we go to the center-chief. She suggests us to manage

group members for borrowing loan. She sometimes helps us form a group of five to six

women. Loans are not given without a group. The formation of groups is a necessary

condition for the NGOs. Sometimes we have to wait for many days to borrow loans

due to the dearth of required number of group members. Sometimes it is difficult to

manage group members. We need money immediately but NGOs do not care about our

problems. They take steps for disbursing loan as per their rules and requirements.”

It is worth referring to the fact that women interested in undertaking a loan do not directly go

to the NGOs. Rather they have to go to the center-chief in their area who is the intermediary

between the NGOs and the clients. Women are supposed to form the group by themselves but

sometimes the center-chief intervenes in the formation of a group when women fail to find

enough members. Every group has a group leader designated as the chairman, and the woman

in second position is called the secretary, while the rest of the clients are simply called

members. BRAC on the other hand designates the group leader as the village organization (VO)

president, VO secretary and VO member. Aside from nominal variations, there is in fact no

functional difference between the group representatives between Grameen Bank and BRAC.

The group leader is also responsible for the collection of installments from fellow members in

her group and organizes other group members before the repayment date so that every woman

appears in the center with her repayment-installment. Female credit clients have reported that

they have to wait for a month or more to get a loan from NGOs, which they have repeatedly

complained about. The field managers of microcredit programs take care when offering loans

in order to ensure financial capability of the clients regarding timely repayment. Approximately

91% of the respondents have confirmed the prevalence of this phenomenon when asked about

why NGOs take time to disburse loan.

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The process of loan-delivery is not an easy one for poor women. Every woman seeking to

undertake loan has to obtain a recommendation from the center-chief before taking a loan, and

other members of the group also have to put a joint signature30 for recording in an agreement

book. Nobody can borrow loans without the joint signatures of the group members, whereby

the recommendation of the center-chief is equally important for serving the purpose. Every

member of the group usually gives their signatures without any difficulties. After the formation

of group the loan is disbursed to them. A remarkable number of the respondents also reported

that the field workers of microcredit programs typically tend to accord certain special privileges

to the center-chief. These include the offering of big loans, and the paying of rent for using her

house as a local center (see details in chapter 4).

It is also observed in the program villages that the microcredit NGOs do not offer loans to

individual women. One of the most important reasons underlying the fact is that the field

workers of microcredit programs do not know everybody in the program villages whereas

center chiefs, other group leaders, and group members are familiar with women in the

neighborhood as they all live in proximity with the broader community. It is found in the study

villages that the idea of “self-selected” or so-called “solidarity groups” is not without problems

in actuality. A respondent named Swapna (age 29) of Grameen Bank said, “Sometimes women

can borrow loans without joining any group if they have income-generating individuals in the

family. NGOs give priority to those who have relatively good financial standings. They always

consider their own interest.” This remark indicates that there are certain economic and

commercial reasons behind this rationale, which points specifically to the commercial viability

of the microcredit programs. Around 31% of the respondent women have reported that the

group-lending mechanism is not functioning properly because some clients can borrow loans

individually, thereby violating existing group norms and the self-selection method. Both

Grameen Bank and BRAC field managers also admit to instances where the group-lending

norms of microcredit programs have been violated. Often, the regulations of microcredit

programs are not strictly observed when offering loan to women who are likely to be able to

maintain regular repayment given their better financial status. Empirical evidences reveal that

the formation of groups is strictly maintained for the middle and lower income groups, while

upper income groups may sometimes avoid this hassle and undertake loan without joining any

30 All group members must input their signature for clients intending to undertake a loan without exception.

Nobody is offered loan without the collective agreement of the group, who for their own interests forward a

recommendation for the clients interested in borrowing credit.

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group. It means that microcredit programs often offer loans to women on the basis of the

existing economic and employment status of the household-head in order to prevent the rate of

defaults. Therefore some women can join the programs without being a member of any group

because the surety of repayment to the creditors is guaranteed by their current economic status.

For example, women who have sources of regular income are afforded priority for undertaking

a loan, and recommendations by the center-chief are typically expedited for the financially

better off women31. Very poor women are always considered risky, and therefore, the center-

chief is less likely to be willing to recommend her in the interests of being on the safer side

regarding issues of adequate and timely repayment. Moreover, NGO policy discourages the

offering of loans to more than one person32 of the same family given the likely burden of the

clients regarding repayment, which is indicative of the commercial-oriented disposition of the

microcredit programs. Besides, specific attention is paid to certain special clients such as those

who are already financially stable rather than economically vulnerable ones who are considered

to be at risk of defaulting. Moreover, if the husbands of the clients have extensive involvement

in regular wage-earning activities, the conditions for receiving a loan are further relaxed. In the

entire loan delivery mechanism, microcredit programs lay an emphasis on the status and

capability of the clients, which once again questions the main motive of the NGO initiatives

for the development of poor women. NGOs, on the one hand, focus on the recovery of loans

and consider the commercial viability of the programs, with the center-chief on the other hand

investigating the existing financial status of the women before offering loans. Furthermore,

when forming self-selected groups, women prefer to choose the clients who have the capacity

to repay the installment in time and avoid complications. Therefore, the self-selection processes

in addition to commercial nature of microcredit programs has led to the exclusion of the poorest

of the poor women from the programs.

Furthermore, the self-selected group mechanism of microcredit programs have brought poor

women in a cooperative forum in which every woman is responsible for helping each other

only in the repayment of installments on the scheduled loan-recovery date. Women normally

have to return the loan installments once a week; which means four installments a month. Being

31 The poorest women are often excluded from the programs due to self-selection processes as well as the

commercial motive of the NGOs. Center-chiefs sometimes choose the financially capable ones among the poor

women in order to avoid the hassle and stress of loan collection for repayment. As a result, exclusion and inclusion

errors sometimes occur in microcredit programs, with the ultimate benefit going mostly to the NGOs. 32 NGOs do not offer loan to more than one person in the same family due to higher propensity for being loan

default. Therefore, they keep the number of the member limited only in one from the same family.

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in a self-selected group means that women in the program villages have been able to develop

the norms of reciprocal relationships amongst themselves through the involvement of

microcredit programs, though this form of social interaction had existed in varying degrees

within specific spatial location, and at the informal level before joining the programs. By

incorporating women into the self-selected groups this kind of reciprocity has been reinforced

and expanded. Women in rural social settings have labor for the individual benefit for the

family, but microcredit programs have cultivated the spirit and ethic of working for the

collective and common good as credit binds them together. Through talking to female clients

of the programs who shared their lived experiences with regard to the issue, the mixed

outcomes of group-based microcredit programs have been realized. The participants of

microcredit programs are now infused with cooperative norms, and have been maintaining

trusting and reciprocal relations with one another, which works best for the development of

those poor women who previously have been out of the orbit of social development. While

norms of cooperation, network, trust, and reciprocal relationships are supposed to be the main

building blocks of the women’s self-selected group, at the same time the lived-experiences of

women and my observations in the field also presents different arguments which will be

analyzed in the subsequent sections.

5.4. Self-selected Group and Reducing Transaction Costs

Field level observations and shared experiences of the poor women indicate that the microcredit

programs lay the responsibility on the shoulders of the clients to form self-selected group

before offering loans for a variety of general and specific reasons. There are no hard and fast

rules for the formation of group. It depends on the number of members of the group to be

required at a particular time. Some of the groups are homogeneous33 and some of them are

heterogeneous34 in character. Women tend to seek assistance from the center-chief and group

leader in constructing a group owing to their oftentimes inability to find and consolidate the

required number of the group members. While talking to center-chief, I was informed that

33 There is no established rule that all group members have to be in similar social or economic statuses. Different

women borrow loans at different times depending on necessity. In this case the most important issue is to borrow

the loan as soon as the group is formed. The homogeneity of the group is not fixed for the smooth operation of

the programs. 34 It has been observed in some cases that poor some women try to avoid the poorest women from being included

into the group in order to avert any complications during repayment because of the heterogeneous character of the

group. They often seek to incorporate members who have more or less equal status into the group. However this

is not always possible, and given the urgency of borrowing loans, women end up forming groups regardless of

their current economic condition.

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some clients35 are difficult to manage because they often fail to repay the loan by the due date.

Therefore, when a member of the group honors his loan-repayment, the pressure on the center-

chief and group leader is reduced. I talked to one recipient of Grameen Bank’s microcredit

program named Shilpi (age 20) in her residence in Chatal village on May 11, 2015. She said,

“They [NGOs] benefit much from the group. There is no pressure upon them. We did their

tasks.” Another member of BRAC named Amirun, aged 60, who was interviewed at her

residence on the 23rd of June 2015, who said, “NGOs construct group before offering loans for

their own advantage. If they give loans to several people together, they benefit. Proffering

loans to any person individually is a problem for them, especially regarding the recovery of

the loan. Groups are therefore constructed to act as a social guarantee for the security of

loans.” The opinions given by the respondents indicate that by constructing groups, NGOs not

only reduce the risk, but also the worry and tension related to the recovery of loan. One of the

respondents of Grameen Bank named Nazma (age 35) spoke about the issue of loan-repayment

for defaulting group members when she had been interviewed on June 28, 2015 in the flowing

way:

“They [NGOs] tell us to repay the loan on time. They say that you have to make the

timely repayment of loan. Otherwise the entire group will be denied loans in future. If

any one member of the group fails to manage the timely repayment of installment, you

have to pay for her. We somehow manage the repayment amount for the default

members in order to stay on the safe side and uphold our reputation. We also fear that

we will not be given loans in future. So we maintain the regular repayment of loan at

any cost.”

If any member of the group fails to repay the installments on time, other women are compelled

to pay for the defaulting members given the fact that the latter is obligated to make the next

repayment for one who has paid-forward the estimated amount for her. The process of bearing

the installments for defaulting members is an informal and individual process, although in

certain instances NGO workers orchestrated it. Therefore, joint liability in microcredit

programs is one example of successful micro-lending for poor women in rural Bangladesh from

an economic point of view. NGOs seek to maximize the loan-repayment yield from the poor

women who undertake loans from microcredit programs, which contributes to the increased

35 It is reported both by NGO workers and respondent women that there are some clients who often fail to repay

the installment in time. As a result, poor women try to avoid such clients in their group formation, while at the

same time NGO workers are also less willing to deal with such clients due to their inability to repay the loan in

time which is considered psychologically trying and risky for them (NGO workers).

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economic portfolio of the programs. NGOs place direct pressure upon the center-chief and the

group leader in mandating that if any one of the group members fails to repay the loan, the final

liability will be on the group. Therefore, group members (in safeguarding their own interests)

put pressure upon the defaulters or pay for them so as to ensure future access to loans from

such organizations. This way microcredit programs have shifted the risk and responsibility of

the program managers onto the shoulders of the clients, ultimately safeguarding the financial

interests of the programs. Rahima (age 60) was one of the respondents and clients of Grameen

Bank. She was interviewed at her house on June, 13, 2015. She explains why NGO workers

instruct client women to form groups:

“Through the group the responsibility of one person is laid on another one so that

nobody can evade the installment. If one cannot manage the installment, another one

will collect money for the defaulting one. They [NGOs] impose their responsibilities

on us. We take our own risk due to problems. They have no risk and responsibility.”

Moreover, loans are not distributed to poor clients without the collective signatures for all loan-

seeking clients in the group. This is because it is often difficult for microcredit NGOs to collect

repayments from individual clients on account of their inability to pay back the loan in time.

Hence, all group members have to put a joint signature for the borrowers. Therefore, group

lending is a far more effective strategy for the recovery of loans, in which group pressure by

local women acts in a way to ensure the timely repayment of loans. Women in the group force

defaulting members to pay the installment amount back; even to the extent of getting them to

sell their household possessions (such as cooking utensils or clothing). When one member of

the group fails to repay the loan, the rest of the women in the group keep pressuring her in fear

of being denied future loans from the NGOs for the rest of the women. As a result, women in

their own interest put collective pressure on other women so that the regularity of repayment

is strictly maintained and guarantees access to future loan disbursements. In this case, the

remark of one of the respondents of BRAC named Piara Begum (age 35) is quotable here. Piara

was interviewed at her residence on June 19, 2015. She explains how women put pressure on

the defaulting members:

“If one cannot pay the installment in time, all other women in the group go to her home

and force her to pay back the installment amount. Sometimes it happens that they take

household materials and cooking utensils, hen, and chicken away from (her) home in

order to get the money equal to installment amount. We even stop talking for this for

long time because of coercing the clients.”

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One member defaulting in a group is tantamount to the entire group defaulting, which tarnishes

the group’s reputation and puts the entire group at credit risk. Therefore, other groups who are

involved in the programs become aware of the consequences of the defaulting group.

Therefore, every group has the primary motivation to ensure regular repayment, even if this

comes at the expense of worsening social and inter-personal relationships with the group

members who live in the same neighborhood. Peer pressure in this case is very much effective

for the recovery of loans from the poor clients, which keeps microcredit field workers on the

safe side, fulfilling their financial target of maximizing the loan-recovery rate. Borrowing

women give the highest priority to their collective and common interests of obtaining further

loan and also for staying in the programs. This way group-based microcredit programs function

as the social glue for women to stay together and maintain access to the collective interests of

credit, but it does not ensure the norms of collective-action in the sense that could contribute

to the development of community in a concerted way. Although poor women involved in

microcredit programs have been able to develop some degree of social capital, they have not

been able to strengthen it due to continuous economic pressure related to the repayment of

loans. This is because the relationships they have developed through regular interactions have

been negatively influenced due to peer pressure for loan-recovery. As mentioned earlier,

microcredit programs place their focus on the timely repayment of loans through the self-

selected groups, which does not necessarily ensure the collective wellbeing of the poor women.

Therefore, groups in this regard has been instrumental in minimizing the risk of loan defaults

and increasing the rate of loan recovery from the poor clients.

One of the most striking aspects of the formation of groups lies behind the motive of the

microcredit field workers, who place priority on the recovery of loans for the sustainability of

the programs, and hence expand the outreach and frequency of programs in the rural areas.

When I wanted to know more about the function of groups in the lending process, one of my

respondents named Farzana Begum (age 35) interviewed at her home on June 23, 2015 said,

“Group lending is a NGO strategy in which one member can help another one. If one of the

members cannot pay back the loan by the repayment date, another one will pay for her.” This

means that if any member of the group cannot repay the loan another one of the group takes

responsibility for repaying the loan for her, which can cause friction amongst the group

members (see details on section 5.7). Groups typically bind 5 to 7 people together under the

norms of cooperative relations for collective social development, which creates further

problems for other members of the group when one of them fails to make the repayment by the

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stipulated date. Other members experience psychological and emotional distress, as they are

likewise poor and needy in the same degree. While this mechanism may provide temporary

relief for the defaulter, it places undue pressure on the other members of the group.

The poor credit clients repeatedly stated that offering loans to individuals is not in accordance

with NGO norms. Lending in a group is a NGO strategy to minimize the risks of loan-defaults

and to reduce transaction costs. All group members become the bearers of risk, whereas NGO

workers remain relatively care-free regarding the collection of installments for the fact that the

main responsibility for ensuring the repayment on a specific date rests fully on the groups and

center-chiefs who control all the women in a group. I asked my respondents: Why don’t NGOs

offer loans to poor women individually? One of the respondents named Rayhana (age 35) under

Grameen Bank gives her opinion with regards to the formation of groups and group liability

for loan-repayments when she was interviewed on June 27, 2015. She said:

“NGOs are using thorns to take out a thorn. They [NGO workers] ask us to form groups

for their own interest. If one cannot pay the installment another one will pay for her.

They do not take any risk. Money is theirs. Risk and tension is ours. NGO-bosses get

all the members of a group in one place. They do not have to go door-to-door. It is

difficult for them. Some women may not be available at home. They know it. All group

members gather in center-chief’s house on their own accord. Everybody is compelled

to go to the local center. While one person can find ways to evade repayment, a group

of people cannot escape. A group functions as the companion of others. If one person

of the group is found, other members of the group can be traced too. This is the reason

why they [NGOs] do not offer loans individually.”

This opinion of the respondent is rather astute. It is immediately obvious from her statement

why microcredit programs suggest that clients form self-selected group before lending to poor

women. Groups are instrumental in minimizing the risk of loan-default, increasing the rate of

loan-recovery from poor clients. One of the respondents named Jamirun (age 40) of BRAC

whom I interviewed at her residence on July 29, 20015 said:

“They [NGOs] constitute groups for the advantage of collecting loan-repayments. If

one cannot pay the loan, all other members put pressure on her. It keeps everybody

under stress. Consequently, they become obligated to pay up the loan. NGO workers

say that if one cannot pay the installment, others will not be given loans. They warn

that they will not offer loans to us in future if there is a defaulter.

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These remarks indicate that in the interest of recovering loans, NGOs ask the clients to

constitute groups, which keep them under strict regulations and fosters group discipline.

Therefore, providing loans to poor women in a self-selected group has been the dominant

feature of microcredit programs, which is the indicative of the risk reduction policy of the

microcredit NGOs like Grameen Bank and BRAC by way of putting liabilities on clients

themselves. In some exception cases, however, it is found the group-lending rules and

regulations are not properly adhered to depending on the financial and employment status of

the household-heads (usually husbands) of the borrowers. This reflects the NGO policy of

checking the moral hazard of the clients and reducing transactional costs. I also asked the field

officers of microcredit programs some questions in a similar fashion that I had with the

respondents: why don’t you provide loan to poor women individually? One of the field officers

of BRAC that had been interviewed in his office room on August 21, 2015 replied:

“It is difficult to pay door-to-door visits to all of the clients. Often they are not

available at home. Poor women have no trace. Through group-formation, one

woman can watch over another one. They come to one place on the repayment

day. Everybody knows the date. Besides, the center-chief lady and group leader

is responsible for assembling all of them.

I probed further: what benefits do NGOs accrue through group-lending mechanisms?

“A group is like a network. It binds all members together, and passes

information to other members in the group too. A group takes responsibility

for the repayment. Poor people are very cunning. Sometimes it is difficult to

catch them. Moreover, there have been times when they even brawled with us

when pressuring them for repayment! Making a row with credit clients can

tarnish our reputation in the village. Both husbands and wives get involved

during some conflicts. It creates further problems. If we have bad relations with

the clients in the villages, it will be difficult for us to keep the programs in

operation. Offering credit in a group has been very effective. We are not

directly involved in any altercations. They take their own responsibilities. They

are now habituated to do it this way.”

The information provided by both BRAC field workers and microcredit clients bears a striking

resemblance in their meaning, expressions and experiences. In the social context of rural

Bangladesh, outsiders are certainly not expected to be antagonizing the local community, let

alone women. In this social background, microcredit programs dealing with the poor clients

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require cautionary measures to be taken, and group lending is one of the most effective

techniques to manage both credit and the clients. NGO field workers informed me that new

recruits were left with strict instructions to carefully consider the local social and cultural

context into account before introducing microcredit program to new areas. Group lending is

therefore a successful mechanism introduced by microcredit NGOs for the recovery of loans

given the social and cultural context of rural society in Bangladesh. Rankin (2002) in her study

in Nepal found that group lending is a successful strategy for the sustainable management of

microcredit programs, through which the onus of the NGOs has been shifted onto the shoulders

of the credit-clients. The most important point to support the fact is that the formation of

women’s self-selected group is a governmental strategy to ensure the recovery of loans from

the poor clients in due time. Collective instead of individual responsibility for the repayment

of a loan functions as pressurizing mechanism that facilitates the collection of money from

clients. Therefore, group lending is a process by which microcredit programs ensure the timely

repayment of loans by using peer pressure upon clients who are not only the beneficiaries of

the programs but also the bearers of risk. Every member of the group is responsible for the

repayment of loans by a specific date, which means that if any one member of the group fails

to repay the installment in time other members of the group36 have to pay the installment on

behalf of the defaulters. It is women who take on the risk and bear the responsibility, while

field workers are only responsible for lending and collecting money. The latter are insulated

from the clients, and can avoid direct conflict or tension with them, thereby keeping their own

position secure and reputation intact and enabling them to further entrench their position and

agendas in the program villages. In this unsentimentally calculative manner, they increase the

number of the clients, expand the outreach of the programs in the new areas, and ensure the

sustainability of the programs. It is important to remember that the viability of microcredit

programs depends on the clients contributing to the increase of the financial health of such

programs through regular and timely repayment despite their poverty and toil. The question of

how self-selected groups in microcredit programs contribute to developing a sense of

solidarity, enforce the network of reciprocity, and produce meeting norms calls for deeper

analysis.

36 It is NGO regulation that if any member of the group fails to repay the installment on time, every member of

the group is liable for the repayment of the defaulter’s loan; which is popularly known as group joint-liability.

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5.5. Norms, Network, and Trust: How does it Work?

As defined by Robert Putnam (1993), norms, networks, and trust are the most basic elements

of social capital that provide individuals the opportunity to develop a collective identity for

achieving shared wellbeing through coordinated actions. This section focuses on how

microcredit programs have produced these three essential aspects of social capital through the

operation and management of credit. I have shed light here on the aspects of group meetings

of women, the solidarity amongst them, how networks of women functions as an information

base for credit clients in the group, and whether it has yielded any remarkable benefits for the

women.

5.5.1. Meeting Norms and Myth of Solidarity

It is claimed that microcredit programs have produced meeting-norms among the clients

through compulsory participation in weekly center meetings and imparting training to them at

scheduled times set by the respective programs in the villages. However, it was found that

meetings are no longer a part of the programs, though at the initial stage of the programs such

regulations were in force. Nowadays the clients only have to go to the center when making

repayments; there are no more special meetings that provide additional information or create

awareness. As a researcher and direct observer, I have been able to observe and experience the

manner in which NGO workers deal with clients at the local centers of both Grameen Bank

and BRAC during several loan-recovery meetings. The prime concern of the meeting is to

ensure the continued viability of the clients to repay the installment, which is the indicative of

the borrowers’ regularity in the repayment processes so long as it is the major issue of the

programs. Even poor women hold the view that appearing at the meetings is solely for making

payment, and not for any educative purposes that could potentially prove effective for

ideational changes and positive attitudes towards their lives. In this case, microcredit programs

cannot develop the idea of social solidarity amongst women by providing them the impetus or

willingness to engage in selfless cooperation for their own collective benefit. Solidarity is the

basic building block of a group that further binds all other individuals into a set of values

permeating every member’s life. Group-based microcredit programs appear to have infused

the idea of self-interest among the clients rather than a selfless attitude. Even though the

program did not harbor any intentions to nurture such anti-social values, the practices of the

programs have created a field of action that encourages self-interested behavior. As a result,

the sense of solidarity amongst poor credit clients has not been engendered to such an extent

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whereby it can effectively unite women altruistically to work for the collective good of the

locality.

I felt it would be pertinent to ask my respondents whether they had to attend center meetings,

what topics were discussed and what activities they engaged in. The answers of the respondents

were negative, and therefore, do not support the idea that microcredit programs foster the

development of meeting norms. The respondents also said that on repayment day in local

center, the credit clients are strongly urged to pay the loan on time along with a stern reminder

about the negative sanctions in place for defaulters. One of the respondents of Grameen Bank

who preferred to remain anonymous remarked in an interview on May 24, 2015:

“No meeting is held in the center nowadays. We heard from senior members

that there was a meeting held in the center long ago. We just go to the center

for repaying the installment. We go there every week. Nothing is discussed in

the center gathering. Officers only instruct us to pay the loan on time. They at

times tell us to use the loan money for income earning activities. But they never

ask what we do with the money. Then again, not all women have to go to the

center. Some women send the money and deposit book through other

people. They do not ask why those women have not come to the center in

person. They only want the installments on time.”

The meetings arranged for providing educational information and building awareness among

the poor clients appear to have been mere program rhetoric, justifying the economic motive of

maintaining good financial heath through its expansion into other villages where the credit

market remains untapped. Evidently, equipping credit clients with the necessary skills and

training to sharpen their business acumen and entrepreneurial capabilities is not a reality of the

microcredit programs in my study villages. Consequently, a large section of poor women is

left in the periphery of development due to a lack of necessary skills and competence for

engaging in any productive economic activities. The microcredit programs have instead given

rise to the perception amongst women that NGOs are only offering credit for their own

financial interests. Loans are taken due to necessity, which does not allow for the engendering

of solidarity and collective-action amongst the poor women. Therefore, the regular meeting

norms and educative training aspect for women could have provided an impetus for the

development of a collective identity by the poor women. This unfortunately did not manifest

in the program villages that I observed.

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5.5.2. Information Network and Economic Outcomes

As mentioned at the beginning of the analysis, women’s self-selected groups consist of several

members. Every member has important responsibilities; one of which is reminding each other

in the group of the loan repayment date. Members of the self-selected groups are the main

networks that transmit relevant pieces of information to other women in the group. They

primarily relay repayment-related information to each other to ensure that they keep aside

enough money to cover the loan by the due date. Borrowing women belonging to a group visit

the group members’ house before the deadline to remind them of their installment

responsibilities. This is the only function of the network that poor women have; to maintain

the collection and repayment of loans, providing them with the added advantage of continuous

communication with other women in the group living in the same neighborhood. The purposive

and one-dimensional function of the network as used by the NGOs – namely to provide

information and timely alerts regarding loan repayment – cannot produce positive long-term

outcomes for the poor women, and is ill-conducive for cultivating proper networks of solidarity

amongst them. Even the center-chief lady warns other clients under her control to keep the

loan money ready in order to safeguard her position. Information dissemination is performed

by going door-to-door, since the clients typically live in close proximity within their

neighborhood. I wanted to know more about the responsibilities of group members, and I asked

a respondent under Grameen Bank named Sureza (age 38), who said, “Before the day of

repayment, the group leader visits the clients home to remind them to prepare the installment.

Sometimes other members of the group also chip in with a reminder. They do not provide us

with any other information aside from dates and amount of money.”

Besides, women have not used networks for accessing information about markets, education,

awareness, or general knowledge that could enable them to advance their social and family

position by engaging in more gainful economic activities. As a result, women’s social networks

have not been as effective in fostering access to common resources in these aforementioned

forms, creating confusion over the potential power of network relations for serving their

collective interests through the exploitation of common resources like credit. Network as a base

of relations has multiple functions. One of the most important functions of them is the social

connectivity; through which an individual can enter the space of the opportunity of the world.

Asymmetry of information is one of the most prominent problems involved in credit market

transactions (Mathew, 2006), and is considered a barrier to development, which microcredit

programs (by constructing women’s self-selected group) can overcome. But my practical

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observations and experiences of female participants of microcredit programs reveal that the

function of network built through women’s loan borrowing group is a target-oriented

mechanism serving the covert motive of increasing the sustainability and outreach of the

programs. By way of minimizing the risk of default by strong norms and dense networks of

reciprocal engagement (Putnam, 1993), network of relationships among credit clients have

provided one-sided benefits to microcredit programs instead of the poor women they claim to

serve. Furthermore, through the vertical link of communications a patron-client relationship

has begun to emerge between the poor women and program workers, while in regards to

horizontal networks poor women have also developed relationships of a similar kind with the

center-chief. It is reported that the center-chief is at times biased in her decision-making and

choices for loan-suitability. She often favors the better-off clients amongst the poor, while the

very poor have become much more dependent on her; thereby reinforcing the patron-client

relationship with the poorest.

5.5.3. Credit Relations and Reciprocity of Trust

Microcredit programs are based upon mutual trust with poor women. Respondent women in

microcredit programs report that they have developed trust amongst themselves in their self-

selected groups to some extent, but after certain points it has been breached due to someone’s

failure to repay the loan in time. There is a common saying amongst poor clients that, “Once

the trust is lost it cannot be retrieved again because broken glass cannot be set together.” Some

members of the group have repeatedly failed to make regular repayment, which causes discord

with other clients about their own ability to repay the installment and continue to participate

in the programs. As mentioned earlier, group members have to put signatures for other

members so that NGOs may proffer a loan. Through joint-liability women have developed

mutual trust that acts as a base for further access to credit and cooperation. However, the

foundation of trust gradually erodes as some of the members repeatedly become unable to

maintain the timely repayment and therefore end up defaulting. Rahima of Grameen Bank has

said with regard to the reciprocity among the group members in the following way:

“If any one of the group members fails to repay the installment within the stipulated

time, the group leader recommends that she is to be excluded from the group. As a

result, it spoils our cordial and reciprocal relationships. The relationship goes from bad

to worse because of this. Sometimes we even stop talking to them. Nobody can

understand how someone is like without mixing with her. At primary stage, we have

trust in the fellow clients but later there develops mistrust and doubt. This is because

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some of the clients get more privileges from NGOs than others. Some members cannot

pay the installment on time.”

From the reality it can be argued that the level of trust amongst women is lower when the rate

of defaults among the group is higher. It may be assumed that if the repayment is regular, the

level of trust among the clients remains high given the fact that everybody is equal in terms

of repayment. The borrowing women have said that clients being regular in repayment

processes might have improved the level of their trust among the group members. Moreover,

a majority of the poor women are found to have been skeptical about the role of the center-

chief who, according to them, is not neutral in her actions in the sense that she recommends

for the disbursement of loan to women who are generally better off. Actions of this kind by

the center-chief creates doubt among women who have not been able to undertake loans due

to the former’s reluctance to approve their suitability for its disbursement.

Respondents report that some clients – being at their wits end – have resorted to offering the

center-chief bribes37 in cash. The field officer of BRAC in Kazirgaon village later confirmed

this, and he also informed me of that one center-chief named Hawarun who continued her

tenure till last year had been removed due to allegations of corruption. She allegedly took

bribes from the clients seeking loans from BRAC. A considerable number of women

(approximately 41%) has reported that the center-chief strongly recommends the person who

bribes her for loan-suitability, and helps relatively wealthier women to access loans

individually after receiving kickback from those clients. This information is supported by both

Grameen Bank and BRAC microcredit clients, which they allege has developed mistrust

among them and has ruptured interpersonal relationships. Therefore, no laudable benefits

from participation in microcredit programs has been achieved, which in turn testifies to the

murky success of the programs in developing mutual trust amongst the poor clients or

fostering collective actions for the development poor women in rural Bangladesh. It is also

revealed that both center-chief and the clients are at risk of losing their credibility due to their

respective performances in regard to credit delivery and repayment. The center- chief has lost

her legitimacy amongst the clients, while clients have lost their reputation amongst group

members. Moreover, the microcredit field managers have also failed to build trust amongst

the poor women because of their self-serving behavior that they have demonstrated in the

37 A significant number of respondents alleged that the center-chief takes bribes to facilitate a recommendation

for their suitability to receive loans. In some cases poor women under severe financial crises need loans urgently

but they find adequate numbers of group members, which forces them to offer kickbacks to the center chiefs.

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processes of allocating loans and collecting repayments. As a result, there is growing mistrust

between the clients and NGO workers. One of the clients of BRAC named Amirun (age 60)

shared her experience of conflict with me at her residence on July 29, 2015. One day she paid

her installment as per normal, but the field officer refused to acknowledge that she had recent

paid the reflected amount. In this situation she lost her temper, and started to chase him will

a billhook. She puts her experiences as follows:

“It was about fifteen or sixteen years ago. That was the repayment day. When Sir [NGO

worker] came, I paid him two installments of tk. 700 together. But he denied that I paid

him money, while leaving the village in the afternoon. Then I had massive quarrel with

him. He refused to admit that I paid him the money. Instead, he scolded me. Then I

chased him with a machete. After the incident, he again came with his office boss, and

after more thorough calculation found that I had indeed paid him the money. Then a lot

of people from the locality gathered around the area. I felt embarrassed by this after

seeing the huge crowd.”

This was not the sole incidence of conflict between clients and NGO workers. There are

different levels of chaos taking place in the center meeting meant for collecting loan-

repayments. A vast majority of women who receive loans from Grameen Bank and BRAC has

been found to be critical and skeptical about the activities of the NGO workers. One of the

clients of Grameen Bank preferring anonymity expressed her opinion with regard to the

relationship with the field officer in this way:

“They [NGOs] have not come here to benefit us. Rather they are here for their own

interests. We need money for our survival. They need profit. Are they our well-wishers

that will do the good for us? In the past we borrowed money with interest from local

usurers, now we take from NGOs. We have not found an iota of geniality in their

actions for us. They force us for repayment. They can even point a knife at our necks

when demanding money back from us. How can we trust them? Our situation is like

facing a crocodile in the water and a tiger on the bank.”

The statement given by the respondents is telling evidence of the frail base of trust between the

clients and the NGO field workers because they have failed to build reciprocal relations of trust

amongst the poor women through the fashionable developmental tool of microcredit.

Moreover, poor women are skeptical about the motives of microcredit field managers. They

could not develop trusting relationships with the clients due to their over-emphasis on

repayment, and thus have lost the trust of women in poorer social categories. The stringent

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conditions for paying the loan back within the scheduled period has weakened the relationships

with the NGO field officers, which casts doubt about the potential of social capital to solve

collective-action problems. I talked to NGO field staff in order to solicit their perspectives. One

of Grameen Bank’s field officers said very frankly, “What is done behind our gaze is not a

concern. Different people have different mindsets, attitudes, and etiquette. The poor people

need money, and we simply provide it to meet their needs.” Microcredit programs have

brought poor women into the field of mutual social relationships, on the one hand, enabling

them to lay the foundation of trust at the beginning, while on the other hand, it has also created

mistrust, doubt, and conflict. As a result, the stated commitment of microcredit programs to

swelling poor women’s social capital in joint-liability credit loans in an inclusive process

remains a contentious issue. Poor women’s participation in microcredit programs is expected

to reap the highest benefits for the development of society only under certain conditions that

ensure an enabling environment for both NGOs and clients in terms of mutual understanding,

and the reciprocity of trust for achieving the collective wellbeing of these targeted community.

5.6. Social Capital and Existing Relationships

Bangladesh is a traditional society that emphasizes strong kin-relations with members of the

same community (Cain, 1991; Ellickson, 1988). Reciprocity is a part of human interactions,

while cooperation is ubiquitous in social life (Anthony, 2005). The norms of generalized

reciprocity is a highly productive component of social capital, which can more efficiently be

used to resolve problems of collective-action, and kinship ties in this connection have a special

role to play (Putnum, 1993). The female respondents I interviewed confirmed that people in

the neighborhood are familiar with each other, and maintain everyday interactions with them.

The study villages traditionally observe close social ties and kinship relations, which typify the

general picture of social relations in rural society in Bangladesh. In this social setting,

everybody knows each other living next door and in the broader community. Only in some

exceptional cases does one find strangers living within the village community.

Almost all women knew each other before joining the microcredit programs because many of

them had been introduced to the programs after being recommended by their kin. Some of the

clients were sisters-in-law, mothers-in-law, aunts, or daughters-in-law who live in or around

the neighborhood. Only an insignificant number of respondent women said that they were not

familiar with the other group members before joining the microcredit programs. Some of them

have come to these villages as brides, but they are few in number. In rural society a newly

married bride is not expected to visit the neighborhood without permission from her husband

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or senior members of the family. Doing so is frowned upon by other members of the community

too. When the bride becomes a mother of children she can go out and visit neighbors beyond

the next doors. Informal social relations among the rural poor women prevail, and after joining

the credit programs of Grameen Bank and BRAC their relationships have turned into regular

and formal interactions, reinforcing the give-and-take nature of their relations to a great extent.

There have been relationships and acquaintances between the women in the villages long

before their participation in microcredit programs, but after joining the group-lending system

they have been able to meet and mix with new people in the villages. One of my respondents

named Tanjina of Grameen Bank shared:

“After my marriage, I came to my husband’s home here in this village. I did not know

many people but only a few living next-door to me. Now I know many people [women]

due to my involvement in credit programs. I have to go to the center and the center

chief that I did not know before. Moreover, we have to join the group. We maintain

communications with the group members for repayment.”

Most of the women are already familiar with one another in the community, with only a handful

remaining unacquainted. The main reason for this is that young ladies in rural areas do not

usually visit places in the community without a specific purpose. However, rural communities

already have a culture of cooperation and tend to help other people in the community where

necessary. In rural Bangladesh, borrowing from others is not unusual. Many of the transactions

are made within kinship groups and family members, while some of them are patron-client

relationships (Dowla, 2006). Poor social and economic conditions of the people force them to

be dependent upon others for a variety of material and nonmaterial needs. Rural social structure

fosters informal relationships amongst the community members. NGOs in this connection very

finely and artfully happened to reinforce and utilize these existing social relations through

microcredit programs, which bound all borrowing women in regular social and economic

relations. Lazar (2004) argues that they [NGOs] “rely upon women’s existing networks of

family and friends, and associated cultural understandings and obligations, in order to ensure

loan repayment” (p.10). What were once occasional and informal relations have now become

regular and formal relations in an organizational and structural manner. It is worthwhile to

mention that poor women usually do not have any scope to be in a formal organizational

structure where sustained economic exchange is maintained. Microcredit programs provide the

space for these women to have a platform where they have to make a scheduled visit in a regular

process, opening up a new world of social and economic relations. Although these new

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dimensions of social and economic relations have been created, there has been the reverse

effect for relations between poor women after entering the new arena of interactions. This is

credit that causes conflicts among the clients at one point whereas in the opposite case builds

the base of cooperation. The conflict and cooperation centering on the borrowing and paying

the loan money back has been the unfortunate reality of the poor credit-borrowing women

within the dynamics of social interactions and new spectrum of relationships. The next part of

the analysis follows the processes of how microcredit programs have developed new

dimensions of social relationships juxtaposing the conflicts of interests and norms of

cooperation, and how that contributes to reinforcing the existing social capital that poor women

generate amongst themselves.

5.7. Juxtaposing Conflicts and Cooperation

Microcredit programs have produced norms of cooperation among the poor credit borrowing

women in rural Bangladesh through the group lending processes, which has been a much

claimed issue in the field of contemporary development studies. In this context the main point

of investigation was whether microcredit programs have produced cooperative norms and unity

among the poor women. It is found in the study areas that Grameen Bank and BRAC offer

microcredit to poor women by constructing self-selected groups that provide women with

opportunity to help each other out in times of need, mainly in the forms of financial

cooperation. As a process every member of the group is liable to bear the responsibilities of

other members in the case of urgent necessity, which is the practiced norms of the groups to be

followed by clients. In this connection “group members cooperate due to pressure within the

group” (Paldam, 2000). When any one member of the group cannot pay the installments other

members of the group are compelled to help the defaulting client on condition that she repays

the same amount for other members on the next repayment day. The center-chief has to pay

door-to-door visits to the clients before the day of repayment to remind them about keeping the

installment amount ready. They primarily try to borrow money from other informal sources

like relatives and neighbors. If they are unable to collect sufficient money for repayment, the

fellow clients have to repay the installment for the defaulter, which is a process of group

liability. This way the processes of intercommunication and reciprocal relationships with

female credit clients has produced a sense of cooperation and camaraderie among the poor

women – although as mentioned before these mutual interpersonal relationships among the

rural poor is nothing new– the existing system of relationships have reached a further point of

development which gives women an added impetus to deepen and expand the scale of social

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cooperation. I asked a number of questions to my respondents in order to obtain their opinions

with regard to the group lending. I asked them these questions during in-depth interview: Do

you have any problems borrowing loans in a group? What do you do if someone in the group

fails to repay the installment in time? Do you have any problems with the defaulting group

members? Different opinions came from the respondents mainly related to the group lending

processes. One of the respondents of Grameen Bank named Mayarun Begum (age 35) was

interviewed on June 17, 2015. She explains about group lending in the following way:

“We are members of the same community and know each other. It is very natural that

our neighbors will come forward to assist if we get into trouble. Lending in a group has

its merits and demerits. If any one of the group members cannot pay the installment,

we help her out. But most often it happens that we have no additional money at hand,

how can we help others? In this case there is conflict amongst the group members,

which center upon the repayment. Despite that we are all stand with one another in

sorrow and happiness.”

Poor women involved in microcredit programs most often brawl with other members due to

issues of loan repayments. It has already been mentioned in the foregoing section that the

microcredit programs of Grameen Bank and BRAC constitute the self-selected group before

offering them loans, thereby shifting the onus and responsibility of the NGO-workers onto poor

credit clients. When women take on this group liability there often develop other aspects of

problems related to making timely repayment. Poor households do not all have the same

economic status as there is often a lack of income earning persons. Consequently, the timely

repayment of loans is typically difficult for many of them, which sometimes escalates into

chaos and conflicts among the members, eroding social relationships. A majority of the

respondent women have reported that the only locus of conflict is the inability of some group

members to repay the installment of loan in time. They also argued that if the group members

are weak in terms of financial capability other members of the same group usually do not trust

that member. Sometimes the rest of the group members hurl vulgar language at the defaulting

member, further compromising the hard-won interpersonal relationships and loosening up the

social bonds instead of strengthening and deepening them. One of the respondents named Ful

Banu (age 40) of BRAC explains the problem:

“We have problems regarding group lending. Everybody is not equal. Some women

cannot pay the installments on time. Then we end up managing money for them. It

becomes an additional burden for us. Sometimes we are not even able to cough-up

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money for our own installments. How can we bear the burden of others? If you have

the financial ability you can pay for others, but the center-chief pressures us to pay the

loans for others, including our own. We exchange hot altercations and sometimes

quarrels with the defaulting group members. We tell them four women have been

punished for one woman. If one cannot make her payment on time, others may

encounter problems in borrowing loan. Why should we be deprived of borrowing loans

because of others?”

These are the authentic feelings and expressions of poor rural women who have experienced

this situation through prolonged involvement in microcredit programs of Grameen Bank and

BRAC. Intra-group conflict has been a regular occurrence amongst clients of microcredit

programs. It is reported by the clients that women are not equal in terms of their financial

capability, which has put them in a vulnerable position in the group vis-à-vis repayment. One

does not want to bear the responsibility for paying the installments on behalf of defaulters. As

a result, the conflict has been a continuous phenomenon amongst the poor clients, adding a new

dimension to their social reality. One of the members of BRAC named Khatun (age 50) has

shares her experiences on borrowing loans in a group as:

“Embroiling ourselves in quarrels is a regular occurrence. Our relationships have

become embittered, Sir. Say, the day before the repayment date, one leaves somewhere

else keeping the house under lock and key. Then we pay the installment for her by

splitting the cost with one another. Sometimes when we fail to collect money for the

repayment, someone ends up leaving the village. Such incidences have happened many

times. We stop talking to those clients for a long time. We sometimes say we do not

even want to see their faces. If you have shame, go away from here. Sometimes we feel

bad after hurling harsh words at them.”

This is not an isolated case in the context of my study areas. There is a wide range of similar

issues where poor women end up undergoing a critical episode of their lives. I asked a question

to my respondents to garner their opinions about the advantages and disadvantages of group

lending and their subsequent impact on their lives. Many of the female clients opined that

borrowing loans in a group is not good given the fact that some clients deliberately leave the

repayment risk to the other members of the group. They know that group members are

responsible for paying on behalf of the defaulting members, which causes further problems in

the group. One of the respondents of BRAC named Amirun (60) mentioned that “some

members in the group take advantage of the collective liability of the group. They do not even

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try to manage the installment; simply pretending instead that they are not able to repay. This is

very bad. Other good clients have to suffer for this.” She further shared her experiences about

how group lending causes conflicts and erodes social relationships:

“Our relationships with many people [women] have turned bad due to credit. I strongly

recommended a woman named Piara for joining the microcredit programs. But she left

home on the day of repayment. She went to another village, which is around three

kilometers away from here. Then I went there on foot to collect money. I even went to

fetch money from her parents’ home for installments!”

This is the social reality of poor women borrowing loans from both Grameen Bank and BRAC.

Conflict and cooperation is a general social process experienced by every member in the

society, but microcredit has paved the way for its regular occurrence. While cooperation is

generally understood as a positive phenomenon for other members of the lending groups,

conflict is an underlying process that grows out of it. This way microcredit programs have

given rise to conflicts, and at the same time have produced cooperative norms among the poor

credit clients, meaning that every system has some drawbacks residing in the system itself.

NGOs through microcredit programs have brought a considerable number of poor women in a

forum of interest under the banner of development through the self-selected group mechanism,

which has opened up new dimensions in the arena of social interactions and mutual

relationships. Microcredit programs, on the one hand, have helped intensify the social

relationships amongst credit borrowing women, while on the other hand, have greased the

wheel of the system to erode the social relationships of the program beneficiaries. In this

context, how microcredit programs contribute to fostering the base of a just society free of

discrimination and inequality by creating, reinforcing and utilizing poor women’s social capital

calls for deeper analysis.

5.8. Social Capital and Reinforcement of Inequality: Does Microcredit

Contribute?

The main philosophy of NGO-promoted microcredit programs is to alleviate poverty of poor

women in order to achieve sustainable and equitable social development. Women’s

involvement in the income-generation projects of microcredit offers promises to cultivate

social and gender equality by way of bridging the widening gap between rich and poor, and

reducing male and female disparity in terms of their access to important social and life-

sustaining amenities. Against this backdrop, the objective of this section is to offer an analysis

as to whether microcredit programs have the potential to reduce the social and gender

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disparities through the rational operation and management of credit. I question whether

microcredit programs can achieve this goal by overemphasizing the recovery of loans and

identifying clients on the basis of their higher socioeconomic status (meaning they are typically

able to pay back the loan in regular installments within one year). The respondent women as

well as NGO workers have informed me that they visit the loan-seeker’s house before the loans

are approved for disbursement. They estimate the price of the available property in the poor

woman’s possession, because they consider the existing asset base as a guarantee and safeguard

for the recovery of loans in the event that the clients end up defaulting. Even the type of house

the poor women belong to is taken into consideration before loans are offered. Loans are only

offered after thorough scrutiny. Every program participant has to undergo a double screening

test before borrowing loans – one is by the field workers of NGOs and the other by the center-

chief of the respective center. Assessments of this kind are intended for identifying the most

reliable clients for microcredit so that the recovery of loans is hassle free, and so that NGOs do

not suffer any losses in order to make the programs successful.

It is found in the study areas that Grameen Bank and BRAC’s microcredit programs tend to be

biased in their selection of clients, which ultimately excludes the poorest women from the

programs. The primary selection process of the clients indicates that NGOs have a specific

preference for those who have regular income and capable wage-earning person in the family

when offering loans. At the same time, the center-chief also typically recommends women who

have a more favorable financial standing compared to others, which further contributes to

inclusion and exclusion errors. One of the clients of BRAC named Khatun (50) who was one

of my respondents told me:

“They [NGOs] verify the existing family conditions, such as houses, number of

children, and the number of income-earning persons before offering loans. They give

loans if the family condition is good. They do not offer loans to those who have no

saleable assets in house, such as a television. They say that there is nothing in your

house to sell. So you will not be provided a loan.”

It has also been found in the program villages that the main motivation of NGOs is to expand

the programs in the broader areas with the maximum repayment rate so that the programs

become successful and sustainable. In this case NGO workers keep in mind the eligibility

criteria for the selection of clients so that the regular return of repayments is ensured on time.

According to the description of many female clients, all women are not given equal opportunity

in accessing credit, and equal amounts of loans is not offered to them. I asked respondent

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women whether NGOs give equal importance and opportunity to every client when they

request for a loan. In a reply one of the respondents named Khatibunnesa (age 45) of Grameen

Bank has said:

“When offering loans NGOs take measures on the basis of the current condition of the

clients. Those who have good financial conditions are given more money. And those

whose economic condition is not as good are given less amounts of money. Sometimes

NGO-bosses take a long time to provide loans. They do it intentionally so as to vet the

eligibility of the clients. Even if they offer loans, it is a very small amount. We cannot

meet our needs with this small amount. It is used up for meeting immediate needs.

Those who have good income, assets and earning members in the family are given

relatively large amount of loan. They can use the money for business and other income-

generating activities. They [NGOs] are just adding oil to the oily head [NGOs prefer

offering credit to those who are already better off].”

The experiences and ground reality of the credit-borrowing women indicate that the process of

providing loans to them operates in contradiction to the moral philosophy of the microcredit

programs, which explicitly aims to promote sustainable development for poor women. As a

result, the pro-poor policy of social development by NGO interventions through microcredit

programs is called in question. Moreover, the center-chiefs also play a rather dubious role, as

they tend to recommend the more financial stable amongst the poor women for loan-

disbursement rather than the poorest women, which exacerbates social cleavages instead of

minimizing and bridging them. I also found an exceptional case in Chatal village where

Grameen operates its program: Grameen offered loans to some women38 who were not clients

of microcredit programs for the reason—those women already possess a good asset base and

substantial monthly income. They were employed in a government-run primary school in that

village, but despite not being inhabitants of that village, they were still offered loans. It is not

relevant to mention here why those women borrowed loans from NGOs in spite of them having

better economic conditions. I asked: why do NGOs still offer loans even though you are not

the target group of the programs? One of them preferring anonymity explained:

“We are doing a job here in the school of this village. We have the financial ability to

pay back loans. NGOs know it well. They do not have any problems recovering loans

38 Those women live in the city and come to school in the village daily. As they work as teachers in the government

primary school, they cannot leave without paying up the loan. They also have to pay the installments in order to

maintain their honor and prestige.

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from us. Our installments are kept ready well before the repayment deadline. They do

not have to come to us for money. We do not have to go to the center either. The center-

chief comes and takes our book with the installments on the repayment date.”

This is the practical scenario of the program village. Making and breaking rules by the

organization lies in the structure of the programs in order that the fiscal interest is properly

served. This might be an exceptional case, but it reflects the hidden motive of the programs.

Not only do NGOs consider their own interests, the center-chiefs also prioritize their

convenience for loan-recovery. Therefore, they are more willing to forward the

recommendations of clients who possess the financial ability to make timely repayments. The

recommendations of the center-chief in this connection is very important for receiving loans

from NGOs, as these are expedited for approval and disbursement. It has been reported by

significant numbers of women both from the middle- and lower- economic statuses that the

center-chief supports and forwards recommendations in favor of the clients who have regular

repayment capacity, advocating to the NGOs on behalf of them to receive substantial amounts

of loans, while only small amounts of loan are recommended for relatively poor clients. One

of the group leaders named Achia (age 30) of BRAC told me of the following:

“If we have faith that one is able to pay back the loans, we make our recommendations

on behalf of her. If we can feel that she does not have the capability to repay the loan,

we ask NGO bosses to make a decision as to what they consider good. We do not reject

them directly.”

NGOs offer small amounts of loans to poorer women instead of comparatively big amounts at

the beginning, which functions as a sort of test by NGO-workers to justify whether they can

repay the loan on time and continue the installments regularly. While a certain amount of

money is provided to relatively wealthier women with much interest, it may fail to reduce the

level of social inequality amongst the poorer classes, and rather has reinforced class-

differences instead. Therefore, the promise of building social capital through the operation and

management of microcredit programs for the development of the poor women in rural

Bangladesh – particularly in my study areas – have fallen short of expectations on account of

the program structure and design, which fails to incorporate the neediest women into such

programs. At the same time, it is true that microcredit has been a proper channel for the entry

of the poor women into the domain of the market, and has made them consumers of the market

economy by easing their access to credit. However, in the design and structure of microcredit

programs there remains the kernels of social and gender inequality. Although the overt

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intention of microcredit programs is not to reinforce existing inequality, the structure, design

and commercial nature of the programs results in microcredit programs cultivating social

inequality in itself. Most importantly, the criterion for suitability is based on the capability of

the poor women to repay their loan-installments rather than on the basis of the level of

vulnerability (or necessity), which is also considered to be another factor that reinforces the

prevailing social disparity. While social capital as a neoliberal development intervention tool

constructed through microcredit programs has been a good strategy for the recovery of loans

from poor clients, it ignores the most important aspects of equitable social development by

integrating all poor women. The process of providing and recovering loans from poor clients

has, however, facilitated the process of producing social class differences. Instead of targeting

the most vulnerable, NGOs seem to prefer selecting relatively well-off clients among the poor

in order to ensure the financial viability of microcredit programs. Moreover, the microcredit

programs of Grameen Bank and BRAC do not challenge the existing social disparity for they

focus their attention on the economic pay-off of the programs, which inexorably amplifies the

divide between the gendered social classes. If the existing pattern of disbursement and

repayment system continues without any necessary modifications, positive developmental

outcomes for poor women would be difficult to achieve.

The findings of the study suggest that microcredit programs reinforce and utilize the existing

forms of social capital for the purposes of the management and operation of the programs,

whereby the potential risk of the clients’ moral hazards, as well as the transactions costs

involved are mitigated through the self-selection process engaged by the poor women

themselves. There remain inclusion and exclusion errors in the organizational structure of the

programs due to NGO preferences, which choose relatively “safe” clients defined in terms of

the number of regular income-earning persons in the family and their existing asset base.

Moreover, the group liability method escalates conflicts among the clients; and while

cooperation in the form of helping defaulters repay their debts has to some extent been

engendered, it is not a spontaneous outcome. This means that NGOs instruct group members

to foot the installment on behalf of the defaulting members, as the whole group is liable for the

repayment. Furthermore, the existing forms of inequality have not been challenged and instead

appears to have been reinforced along class and gender line. Besides, among group members

there prevails a form of envy, hostility, and misunderstanding that centers upon the repayment

of loans. Therefore, microcredit often serves as a mechanism to produce and reproduce

conflicts and inequality (Geleta, 2014).

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CHAPTER 6

Disciplinary Technologies and Maximization of Recovery in

Microcredit Programs

Microcredit programs have gained huge prominence and attention for the high recovery rate

and sustainability of the programs for banking on the poor; particularly poor women.

Microcredit NGOs consider women as convenient subjects for the viability and sustainability

of the programs given their greater propensity to pay back loans (Rankin, 2001; Havers, 1996).

While the poor are not bankable and hence are denied to have access to credit services,

microcredit programs have proved to be successful initiative. Since conventional banking

systems do not offer credit to the poor given their lack of financial and physical collateral,

microcredit programs have successfully incorporated those clients into the market while

boasting an impressive recovery rate. Against this backdrop, the principal focus of this chapter

is to offer an analysis as to how microcredit programs have been able to ensure maximum

recovery from the poor clients in my study areas. Moreover, I seek to investigate how

microcredit programs regulate clients in order to check their moral hazard, how poor credit

clients are kept under continuous surveillance in a subtle and self-regulated way, and whether

sanctions have been imposed on defaulting clients.

6.1. Coercion and Discipline in Microcredit Programs

The disciplinary technology of power is one of the major aspects of Foucault’s intellectual

contributions. Discipline is the technique and practice of correcting both individuals and

populations (Dreyfus and Rabinow, 1983). This technology of power emerged in the eighteenth

century and rapidly developed in the nineteenth century as a practice in different institutions.

It is not simply confined to the prison setting; many aspects of disciplinary techniques are

established practice in monasteries, armies and workshops. Subsequently, such disciplinary

techniques morphed into general formulas of domination (Foucault, 1977a). Discipline is a

type of power comprising a whole set of instruments, techniques, procedures, levels of

application and targets (Foucault, 1977a) aimed at improving the operational efficiency and

profitability of the apparatus of production in a particular institutional setting (Smart, 1995).

What operational efficiency do microcredit programs possess for achieving the highest possible

return from the target groups, and how do they enforce organizational discipline? How do

microcredit programs compel poor women to comply with the NGO-discipline for paying up

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installments in a given timeframe? How do field managers of microcredit programs deal with

the clients? All these questions are addressed in this section of the dissertation against the

backdrop of the disciplinary technology of power.

Information gleaned from the NGO workers suggests that the field assistants of microcredit

programs who deal directly with poor women face serious pressures from their respective

offices to ensure the highest recovery rate, which in this case obliges them to coerce poor

borrowers into paying back money within the given time in order to safeguard their

occupational position. They ultimately put severe pressure on the clients since they are

accountable to their organizational superiors. This is a chain process that affects not only the

credit clients but also the field-level employees of the microcredit institutions. As I have

observed the loan-recovery meetings of both Grameen Bank and BRAC, it has offered me the

opportunity to have some practical knowledge and understanding about how the loan-recovery

system works in the program villages. This opportunity has paved the way for me to experience

the situation in one of the centers of Kazirgaon where one field worker of BRAC was present

collecting installments from the clients. Several groups of women were also there, and some of

them were trying to explain to him their reasons for being unable to make repayment that day.

They were hoping make the repayment on the next reimbursement day. As an observer, I noted

down what the field manager said:

“I will not listen to any of your words. I only know you have to pay money today. But

I do not want to know how you will manage it. This is not my concern. I cannot lose

my job for you. I have not been given the job for helping you here. When you take out

a loan you feel better, now you have come to bargain with me. If I lose my job, will

you feed me? I am here. Go and find money from wherever you can. I will not go

without receiving the money. I will be here all night if need be.”

The statement of the BRAC field manager reveals that taking money from the poor women on

a scheduled payment date is the main motto of the programs regardless of whether the clients

are able to pay on that day, thereby binding poor women into the NGO disciplinary system.

This NGO discipline forces all borrowers to comply with a strict timeframe for borrowing and

returning loans under the terms and conditions of the program, with transgression of the rules

of the programs leading to the exclusion from future participation. I wanted to substantiate my

field notes with the opinion of NGOs workers. I subsequently had an informal talk with another

field officer from BRAC. I asked him several questions regarding how he ensures the timely

repayment of loan from poor clients. What is his level of accountability to the senior

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management with regard to the recovery of loan within the stipulated time? Do they face any

official obligations for the recovery of loans, and how do they handle them? He said in his reply

to those questions:

“We are instructed by the office boss to ensure the timely recovery of loans at any cost.

If we fail to fulfill the target, we are accountable to the senior managers. We are always

in fear that we are going to lose our job if we fail to recover the loans on time. In this

situation there is nothing we can do but force clients to pay up the installment. We do

not leave the clients’ home until we receive the money. We pursue [adhere to] the

clients until the money is paid. We even go to them up to five times!”

It is found in the microcredit programs of my study villages that the disciplinary norms of the

programs are strictly applied to the clients by imposing strategies of social collateral through

group lending in which women have been inculcated with the sense of responsibility for aiding

other members of the group. This way microcredit programs secure repayment of loans at the

expense of joint liability. It has already been discussed in the social capital section how

microcredit programs operate by forming self-selected groups to minimize the risk of defaults,

which thereby ensures the economic pay off and sustainability of the programs.

I asked my respondents about how they maintain timely repayment, and whether they have any

problems complying with the rigid weekly installment. Besides this, I also wanted to know what

strategies the microcredit programs of Grameen Bank and BRAC adopt for the timely collection

of loans, and how they encounter them if they do not have the scope to manage the repayment

amount. The experiences of the clients are far more critical as they are the main beneficiaries

of the programs and the bearers of risk and responsibilities. Their responses indicate how the

borrowers are forced to comply with the NGO norms of discipline, even if it comes at the cost

of intra-group conflict and psychological stress due to repayment pressures. How women

experience conflict and (yet) continue participating in the programs abiding by the stringent

rules of the programs has come out in the story of one of the Grameen Bank members named

Achiya Khatun (age 45). She expressed her opinion in this way:

“That day was Wednesday. It was the day for making repayment. But I could not

manage the money for installments in spite of my efforts to save for it earlier. I could

not even manage to borrow from other sources. That is why I thought of going to the

NGO office beforehand in the hopes of making the office boss understand. But I could

not make him agree in any way. Rather he said, “If you cannot pay the money, I will

tie you in the Bank.” I lost the ground from under my feet after hearing this and

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immediately left the NGO office. I went back home. Then I took out money from a

money-lender in the village on interest. I have paid back money going to the office.

Since then I started feeling dizzy. The words of that officer still continue beating into

my ears. I became senseless after coming back home. Saliva was foaming out of my

mouth. Then I was taken to Osmany Hospital [government hospital in the nearby city]

for admission and kept there for four days for treatment. Since then, high blood pressure

has been detected.”

This is just one of the lived-experience of credit borrowing women who have faced the severe

stipulations of NGO microcredit programs with regard to loan repayments. This is not an

isolated case. When women borrow loans, they have to undergo certain kinds of test to prove

their eligibility for the program. Some of the criteria include having at least one regular income-

generating source in the family. Aside from this, the existing properties of the clients are

carefully evaluated by the program field workers such as household items and other valuables

that they may consider as a form of security for the loan. This is one kind of invisible self-

regulated technologies that control credit clients in terms of their financial possessions and

retain them in the programs. The NGO interventions of microcredit programs has proved to be

a shrewd way of accessing the poor sections of society by incorporating the program

participants into a disciplinary surveillance process; thereby transforming them into docile or

submissive entities amenable for the smooth and sustainable propagation of the programs,

which is ultimately aimed at maximizing the financial interests of the NGOs. This process of

program discipline has made the poor credit borrowing women in rural Bangladesh a

submissive social object, and has eroded their spirit instead of encouraging them to live with

dignity in society. This is because the norms produced by the program have been detrimental

to the women’s self-esteem and self-confidence. Moreover, NGOs seek the assistance from

local elites in taking back loans from the defaulting clients. Through this, they employ social

pressure to ensure the timely recovery of installments.

Grameen Bank’s field manager shared his experiences about the dealing of microcredit and

loan-recovery in the following way: “We impose serious pressure on the clients from our

institution and try to recover the loan in a good manner. If our attempts fail, we seek

cooperation from influential local people. We discuss the issue and try to convince them.” Why

NGOs seek cooperation from local influential people is an important point to be noted down

for understanding the disciplinary process. Often, they arrange meetings with local leaders and

neighborhood representatives to settle issues of loans. NGOs usually do not directly interfere

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in the affairs of loan collection, especially from defaulting clients39 because this responsibility

lies with the local center chief and/or the group leader who assists the program workers.

Powerful local elites also help collect loan repayments from the defaulting clients if need be.

They seize whatever materials the poor women have in their possessions; these include

household items, cooking utensils, furniture, cows, goats, and even tin rooftops. Local people

consider the honor of the neighborhood at stake when there are defaulters unable to repay the

loan, which is tantamount to the denigration of their village’s image and status. So they arbitrate

the conflict between women and NGO officials, often scolding the client women or hurling

invective at them. One of the respondents of BRAC in Kazrirgaon (age 39) named Shiri Begum

shared with me her unpleasant experiences:

“There is nothing to say as forgiveness to NGO officers. We have to pay back loan. If

there is no money, they go for our household items. They will take those items away in

place of money for loans. The wife of the man next-door died because of the tension

created over loan-repayments.”

In the practice of financial transactions no flexibility or leniency is given to the clients to ensure

the sustainability of the microcredit programs. From the clients’ point of view it can be argued

that the rigidity of the program requirements in connection with loan-recovery has hindered

their ability to realize the actual benefits of microcredit. Too much regulatory discipline is not

beneficial for the poor; particularly for the very poor. Instead, it has brought negative effects

for the clients. It can be argued that the incorporation of rural subjects into developmental

discipline through the instrument of microcredit has led to the exclusion of the poorest of the

poor women from the programs. Microcredit NGOs like Grameen Bank and BRAC are found

to have prioritized the economic aspects of the programs when offering loans in order to secure

highest margin of profit from their investment by looking at the financial security of the

borrowers. Therefore, the loan delivery system has primarily focused on the existing asset base

of the clients as a safeguard for loan-recovery.

39 NGOs place clients in two categories (such as ‘good’ or ‘bad’) on the basis of their repayment performances.

There are some clients who have repeatedly failed to repay loans. In this case the NGOs remove those clients from

the program. They do not drop the clients by remitting the loan still due to pay. In this situation they take every

possible action to recover the loan from the poor clients, and oftentimes there are some clients’ husbands who

cause conflicts with the NGO workers. Seeking help from the local elites is a last ditch attempt made by the NGO

officials. In the rural society of Bangladesh, people value the status of their own community. Any kind of activities

by the local people that may tarnish image of that community is not welcome. NGOs therefore sometimes exploit

traditional sentiments that value the code of honor. It is also reported that NGOs treat local influential people

particularly well, sometimes even co-opting them into working for NGOs by offering attractive payments.

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6.2. Security Deposit and Disciplinary Power

It is learnt from the respondents that before offering loans to poor women, NGO workers of

Grameen Bank and BRAC advise the poor women to deposit money in the respective NGOs by

opening an account40 in the NGO office which, according to BRAC officials, constitutes around

10% of the loan. Opening an account for borrowing loans is a mandatory condition for all new

and old clients of Grameen Bank and BRAC. Almost all respondents have said that they have

to deposit at least double the amount of each installment before getting loans from NGOs. This

is just a general prerequisite for the microcredit programs that is strictly maintained by the

program organizers. Moreover, the household assets in the form of homestead land, amount of

gold41, and number of income-earning person in the family (if any) is seriously considered

before disbursing the loan. When I talked to my respondents, they have said that these things

are a form of collateral in order to be eligible for a loan, even though microcredit programs

claim to operate independent of the need for collateral from poor clients. I also asked NGO

workers to verify the opinions of the credit clients. They have said that security for the recovery

of loans is a program concern, and therefore, a minimum amount of properties in the possession

of the clients is considered necessary. This sort of practices in microcredit programs is indicative

of the security measures taken by microcredit NGOs to curb the moral hazard of program

participants, which ensures its successful propagation and expansion into new areas. When I

again asked my respondents why these things are considered essential for the disbursement of

credit to the poor women, all of them have said that these assets guarantee the return of loans

in case of their failure to repay them. One respondent named Achia Khatun (age 45) of Grameen

Bank spoke of her experiences:

“We have to pay the installment in time. We bring money from one person and then

give it to another person. Is there any way for not repaying the loan? We have to repay

the installment by selling land, gold and even blood. Nobody is spared. No mercy! No

kindness or love! They [NGO workers] are so cruel.”

40 All clients of microcredit programs are advised to open an account with the NGOs before borrowing loans in

order to deposit some money as collateral. This happens in spite of the fact that NGO microcredit loans have been

glorified for allegedly being collateral-free. In my study villages at least, this myth has been exposed. 41 Gold is a precious metal that all classes of women cannot possess. Although in Bangladesh every married

women has at least a minimum amount of gold in the form of rings, earrings or other jewelry. NGOs primarily try

to ascertain whether poor women have gold or other valuables in their possession so as to ensure the financial

status or security of the clients. It does not necessarily mean that all women must have gold in their possession.

This is just one of the assets that NGOs take into consideration before offering loans to poor women.

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Moreover, it has been reported by a significant number of the respondents that program workers

in many cases go to a credit-client’s home to assess the existing assets and valuables they

possess if they have repeatedly defaulted on their loan-repayments. The household items and

other valuable assets in the possession of poor women are considered by the NGOs the last

resort to recovering loans from them. It is also been learnt that Grameen Bank and BRAC do

not offer loans to poor women without estimating the value of existing properties and other

items worth selling for making up the loan. The actual seizure of properties from the defaulters

is done in a very subtle way, which keeps the program managers in a safe side and seemingly

beyond reproach. With the exception of a few who belong to upper-income bracket, almost

every woman in my study areas have said that influential local members are involved with NGO

workers in sequestering the properties from the households of poor women as a substitute for

repayment. A considerable number of respondents reported that the NGOs have an interest in

seeking the cooperation of people with significant clout in the villages, and therefore offer them

special treatment and personalized care in their offices. Some of the women (about 31%) also

alleged that NGOs offer monetary benefits to local touts who end up working favorably with

NGO officials. Whenever NGO workers fail to obtain the loan-repayments from the clients,

they look for a better solution to reduce the financial deficit by petitioning influential people

within the community to assist with the loan-recovery. This process functions as a disciplinary

mechanism that binds poor women into the structure and stricture of regular financial

repayment. It has also been informed by some of the clients (around 24%) that women who are

more financially secure do not typically disclose NGO secretes; such as for example the

hegemonic role of NGOs in recovering loans from the poor clients for the fact that they are

given unfairly large loans compared to the poorer women. Women42 who receive these big loan

with relaxed repayment conditions are reported to support the initiatives and programs of the

NGOs. While taking to poor women, I found that they had negative views about microcredit

because of the rigidity of the programs. One of the clients of BRAC named Amirun has said:

42 There are some women among the poor section who are the clients of microcredit having higher income than

other poor women. For example, there are some women who have a husband and working children, which ensure

that the income of these households is regular. As a result, the repayment performance of these clients is better

than any other income group from the middle or lower income brackets. There is also evidence that some women’s

family members live abroad, and they borrowed loans from NGOs to repair their houses. In this case the repayment

of the clients is regular and recovery of loans does not face any difficulties.

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“If Azrail43 [the angel of death] is to come, he will stop coming as he can see the NGO

workers [installment collectors]. Even Azrail fears the microcredit workers. They are

more powerful than Azrail. Azrail may be kind too but not the NGO workers.”

The experience of the poor women with microcredit shows their resentment with the rigid

repayment conditions of the programs, which forces clients to adhere to the disciplinary norms

of the NGOs. NGOs have bound women under certain rules and regulations through the

management of credit, and in that way women have been more amenable to discipline. From a

strategic point of view this disciplinary operation can easily be conducted on the women by

systematically integrating them into the financial and economic networks of microcredit

organizations, which ensures the development of discipline on a long-term basis (Brigg, 2001).

6.3. The Sunset Law: A Summary of the Opinions

One day at around 10 a.m., I entered the village to interview some respondents I had previously

selected. I went to a borrower’s home where I met her husband. He was sitting on a wooden cot

inside his house. He was a mason in profession. That day he was off work. At one stage I

approached his wife named Sufia (age 39), who was my respondent, to have a talk with me.

Before I managed to talk to his wife, the man very enthusiastically began to talk about

microcredit:

“Microcredit programs have introduced the British Sun Set Law again, though the

British rulers left the region long ago. Once when there was British rule in the then

Indian Sub-continent, the British rulers introduced the Sun Set Law for collecting

revenues from the subjects. They set conditions that the subjects had to pay their dues

before the sunset. NGOs nowadays have introduced the same system in the rural areas

again in the same vein, but under a different name. By visiting the poor women’s houses

they encourage them to borrow loan. When the number of credit borrowing members

increases, they change the attitude and make a complete volte-face. Sir, you do not

know the character of NGOs. They will do anything to back money from the poor

clients.”

This is simply the summary of a candid opinion of a man whose wife is a microcredit client of

Grameen Bank in Chatal village. When Grameen Bank workers come to a new house to garner

participants they highlight a lot of positive aspects underlining the benefits of microcredit that

43 The angel of death takes life away from human beings and is greatly feared. NGOs workers are compared with

the angel of death given how they put serious pressure on clients for repayments, in which case the poor clients

face existential hardships when they cannot manage the amount of installment to repay the loan.

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sounds very enticing. However, once they get involved in the programs they start to realize what

benefits are accrued to them in this economic venture. Everybody has to make the repayment

within the scheduled time. Nobody is spared from these inflexible rules44. The saving of money

for installments is relatively easy for the higher-income groups, while it is difficult for the

middle and lower income groups due to the lack of regular income. It is learnt from respondents

that the NGO workers do not leave the village without money. About 89% of the respondents

said that they remain sitting in the house till evening and well into the night if need be,

demanding repayment. In this situation poor women do not have any option but to collect money

from other sources45 in order to appease the field workers of the programs. This way the

coercive manner of repayment has been a successful technology for obliging clients to maintain

scheduled payments. The experiences of a female credit-client of Grameen Bank named Hena

Begum (age 40) is mentionable here:

“We have severe problem paying up the installment. We can die but cannot stop making

the repayment. If there is dead body in the house, we still have to pay the loan first,

before we can bury the dead body. NGO workers come and sit in the house on the

repayment date. They do not leave the house until we pay the loan. We have to pay

back the loan at all costs.”

This statement testifies how workers of microcredit programs put serious pressure upon clients.

Many borrowers have claimed that their lives are at stake due to pressure to repay NGO-loans.

In the rural areas poor people usually lack the capacity to save cash because of the paucity of

regular income and extensive financial crises and growing needs of the family. NGOs do not

take into consideration cases where women are only given a short span of time to repay the

loans, forcing poor women to meet the repayment deadline despite the extra burden that these

women carry. I asked my respondents about what NGOs do if they fail to manage the repayment

in time. One of the respondents of BRAC named Mina Begun (age 39) describes her experiences

in the following way:

“NGO workers do not go until we pay up the money. They do not go despite night

appearing. I have a heartrending story of my life. That was a repayment day when my

44 It is observed in the practical field of investigation that the poorest of the poor are always in economic hardship

whereas those who are relatively good in terms of income status can repay the loan without sustaining stress and

difficulties. 45 If the clients fail to collect money to pay the installments, they go to relatives and neighbors to borrow money.

Sometimes they borrow from other NGOs because repayment on some occasions is made by cross borrowing.

They also borrow money from local money-lenders to meet the repayment deadline.

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father passed away. Even that day they did not agree to go away without money. My

father was about to breathe his last, yet they were sitting in the house. We all were

crying but they had still been sitting there. Then my moribund father was whispering

to me: ‘You would pass your entire life through the sufferings of loan.’ You have no

time to give water into your father’s mouth. My life is passing through sorrow and

sufferings indeed!”

There is a common saying in the entire villages of both Kazirgaon and Chatal that NGOs take

money back from the borrowers, keeping the dead body on the ground. It means that when

someone dies people naturally becomes very sad and other fellow members of the society

become very sympathetic towards the members of the deceased family as well. At least for few

days members of the neighborhood usually cooperate them and help them out with succors. But

even in this sorrowful situation NGO workers have shown no mercy to the borrowers simply

because they prioritize official norms that bind clients into a disciplinary system. In this manner,

poor women have been set to follow and maintain the conditions of the programs, which

ultimately make them docile and subject to particular norms and values nurtured and practiced

by microcredit programs. From the practical ground and lived-experiences of poor women

involved in microcredit programs, the reality points to how NGOs like Grameen Bank and

BRAC give highest precedence on maximizing the financial returns of the programs at all costs.

Rumena Begum (age 36) of Grameen Bank said:

“I am very exhausted saving for the installment. I have to think of the installment before

everything. What is gained is not necessary to know. This is not the concern of the

NGOs either. Their concern is to take back money. Storm blows over my head on

Sunday and Monday [before the repayment day]. I go to the center by managing the

installment amount at any cost. If I cannot manage the repayment, NGO workers will

arrive at my home and keep sitting until the money is paid. We have to pay back money

in time, no matter whether we have eaten or not. We get into do or die situation. We

cannot escape the repayment even in a particular case. We just have to pay as we all

know.”

This statement indicates that how poor women have been forced to repay the loans in time

even at the expense of their lives. The life of the poor clients has been fixed into a cycle of

loan repayment, borrowing from and paying back other people, while at the same time this

disciplinary process has fostered cross-borrowing from formal and informal sources rather than

reducing the level of dependency on other people for financial assistance. What necessary steps

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do NGOs take in the case of failure to collect repayments? Shimul (age 32) of Grameen Bank

shared her experiences with me:

“If somebody cannot pay the money, NGO workers come home and take that women

away to the NGO office. Once the NGO workers took my mother-in-law from home

because she failed to pay the installment. My husband was working. When he came

from work, he went to the NGO office to bring her back from there. When the NGOs

do something like this, nobody can do anything. Local elders have acquiescence with

them. They speak for the NGOs, not for us. They also admonish us by saying: ‘why do

you take loans that you cannot pay back? You have tarnished the image of our

community.’ We have to pay money at any cost. They [NGO workers] intimidate us

with the threat of property seizure. We have to pay money by even selling our

household materials. We borrow from other people to make up for the loan-amount.”

Microcredit NGOs do not give any leeway to the clients to pay the loan money back on any

other day except the repayment date. They rigidly bind poor clients into a specific time schedule

and force them to follow fixed deadlines. In cases of failure to repay loans, they compel women

by social and group pressure to pay back the required amount. The threat of legal action and

browbeating of the NGO workers has been reported by many women who have been at the

receiving end of the hegemonic power of the NGOs and their administrators during loan

collection periods.

6.4. ‘Blood Suckers in the Village’

There is a popular perception amongst people in the villages that NGOs are bloodsuckers. They

have entered the village not for the benefit of the poor but for the exploitation of poor people

by offering them credit. NGOs have set a trap that poor people have unwittingly been ensnared

in due to their poverty. The role of NGO microcredit intervention programs by Grameen Bank

and BRAC has been severely questioned by the very beneficiaries of the programs. The lived

experiences of the poor credit clients are the critical point of discussion for a more holistic

understanding of the situation. A good number of women borrowers, including even male

household members, have registered a negative opinion towards the microcredit programs of

these two NGOs in regards to their harsh methods of loan-recovery and management. People

are very much aggrieved with Grameen Bank and BRAC for their overbearing practices. When

I started my first mission for data collection I entered Chatal village where Grameen Bank has

been operating microcredit programs for nearly 28 years. I entered the house of one of Grameen

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Bank’s borrowing client named Piara (age 48), where she offered me a seat. Even before I

proceeded to the in-depth interview, she began talking about microcredit:

“I have many bitter experiences about microcredit [kisti]. I am an old client of

microcredit program of Grameen Bank. I wanted to improve my life by joining the

credit program. It has not been possible. It is not a good way to bring about changes in

life. It may be good for us only when they [NGOs] consider our problems. They never

do it. They [NGO workers] are like leeches that suck our blood. If they do not get

money, they never go away. They are like superglue: once stuck, it cannot be removed.

By joining the credit program, I have expended all my blood. All of my energies have

been depleted due to credit. Everybody is feeling like me. We have no way to get out

of this cycle because of our problems.”

Both Grameen Bank and BRAC are resented by numerous respondents because of the former’s

domineering and exploitative practices in the villages. I asked my respondents about why NGOs

would offer loan to the poor women without their interests. Every woman has said that at the

beginning microcredit programs only present the positive side of their scheme such as good

prospects for clients, but after the loan has been offered the gravity of the problems begins to

escalate as with the progress of the repayment, which gradually becomes critical. One of the

main reasons for the severity of the problems encountered by the clients is the repayment of

loan in a certain time frame, which most of the women find difficult to meet. Microcredit NGOs

have the major intention to take money back from the clients regardless of whether they can

repay the money in time or not. As a result, it has triggered the question as to whether the role

and practices of the NGOs by way of microcredit programs are in fact intended for bettering the

lives of the poor women in rural Bangladesh. The role of microcredit programs of both the

NGOs has been very questionable due to its stringent repayment rules that have bound poor

clients into a disciplinary system by capitalizing on their traditions and values.

6.5. Women’s Shame and Sense of Prestige as a Form of Discipline

Women in Bangladesh society and culture nurture distinctive traditions and values. In the

context of rural society in Bangladesh, women have a different sense of prestige and honor.

They also receive differential treatment from the society. As a highly male dominated society

women are seen as subordinate entities in the family, and even in the broader society, which

produces particular sets of values for women. The subordination of women in this case refers

to their inferior position compared to men (Sultana, 2011). While men are allowed to exercise

greater agency in his range of choices as a member of the society, women cannot do the same

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because of the societal norms and traditions. In this social setting what is convenient for men

to do is deemed difficult for women given these cultural and customary traditions of the society.

Feldman & McCarthy (1983: 951) point out that the Islamic dictum for women are generally

to be “shy and have shame” leads to the norms of showing respect to the elders by keeping

quiet and keeping one’s head covered in their presence. In the rural society of Bangladesh,

women were commonly identified with modesty and purity (Blanchet, 1984; Kotalova, 1993;

Mandelbaum, 1998, cited in Rahman, 1999). The practice of these norms has made them

inferior vis-à-vis their male counterparts. Women are generally characterized by society as

weak, timid, feeble-minded, inactive, subordinate, submissive, delicate, and dependent. They

are also stereotyped “as passive, docile, silent, illiterate, and keep them invisible, voiceless,

choice-less, faceless as objects of men in the society” (Rouf, 2013: 75). Furthermore, while

men can sometimes violate the norms of the society, women who do the same are stigmatized

more severely, and sometimes suffer social punishment such as “isolating ones family in the

village” (Karim, 2008: 10).

It is because of these gendered sociocultural norms that force women to maintain and uphold

the traditional norms and values. In the opposite case they have to pay the price46 for their

indiscretions. In this social and cultural backdrop microcredit programs have appeared in the

villages with their mission drift of poverty alleviation and empowerment of the poor women.

This traditions and societal norms have paved the way for microcredit programs to operate with

them as a convenient way overcoming the social barriers encountered in the rural social

structure. During my data collection session I asked my respondents why microcredit programs

offer loans only to poor women instead of men, though they know that women do not use the

loan and cannot have any control over it. One respondent named Asmatun (age 37) of Grameen

Bank said in response to my question:

“Women can easily be found at home. They usually do not go far away from home.

Most of their time is spent staying at home. Moreover, women feel very shy in front of

men. They are submissive and humble. Women do not argue with men. They [NGO

workers] can say something to women and cannot say anything to men. If women row

with men, it will taint the image in the society. People in the neighborhood also will

spread scandals [durnam rotabe]. If men pick quarrel with other people, it is not a

46 Women who are not conforming to the norms and values of the society are often ostracized; with local elites,

religious fundamentalists, and theocrats urging people not to interact with them. Consequently, they live in the

village as an “isolated family.”

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problem. If women do anything wrong, the entire society will cast aspersions [ninda

dibe] on them. They even cannot show the face in society. They lose their face in the

society. Women can easily be controlled. For that reasons, they [NGOs] offer loan to

women instead of men.”

Rural social structure is complicated in nature, and is characterized by highly rigid cultural

values that have segmented society in terms of gendered norms, which is valued by the fellow

members of the society. Grameen Bank and BRAC have come to these villages to operate

microcredit programs in this social context, which has provided the programs a base for

capitalizing women’s traditional norms and values aimed at maximizing the financial benefits

of the programs, increasing the economic portfolios of the microcredit institutions. One of my

respondents also has said with regard to this issue:

“Poor women have nothing but their prestige. God is the owner of honor and dignity

[man-shamnner]. We have to guard it. Otherwise we have to be accountable to Him on

the Day of Judgment [keyamater din]. We cannot sacrifice our prestige [Ijjat] due to

loans.”

This is the situation of women who always place serious importance on their social and

religious standing more than anything else. The strict observance of such values has furnished

an enabling environment for these microcredit programs to reach the apex of success.

Moreover, there are also allegations that field level workers in the program villages verbally

abuse women in front of other clients, causing the victims to be more amenable to the discipline

of the programs. A remarkable number of respondents have said that NGO workers hurl insult

and rebuke defaulting clients in front of the gathering of women in the local center. This has a

damaging effect on their psychology, resulting in the denigration of their reputation and

credibility amongst other clients. The clients of microcredit programs are always struggling to

meet repayment deadline. Remaining in the credit programs has been a major concern for many

of the poor clients because of two considerations: saving the face and honor in society as well

as having the image intact among the group members which may malign in the neighborhood.

If the image of any women in the community is tarnished, the possibility lies there for them to

have difficulty securing the future cooperation of other members of the neighborhood during

periods of crisis. For fear of being ostracized, poor women try to maintain NGO-discipline at

a heavy psychological cost. Despite facing the problems of borrowing and repaying loans,

many poor women have been in the microcredit programs as a part of peer motivation.

Microcredit in this regard is, at least, the possible alternative to meet their immediate economic

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crisis in which case women have been striving to uphold their reputation untainted amongst

fellow members in the fear of being dropped out of the programs even by complying with the

stringent rules of the programs. I also asked my respondents in order to know about what

problems they encounter in case of being unable to make the repayment in the given time limit

and how they negotiate with the NGO workers with regard to the issue. One of them named

Gulecha Begum (age 41) of Grameen Bank member in Chatal village has described her

experiences as:

“If there is no money for paying the installment, they [NGO workers] call the

clients in the center. They affront us in front of all. They keep us standing. Then

they ask: ‘Have you consumed the money? As you have consumed money, why

can’t you pay now? Whatever problems you have, there is no exemption but pay

the installment.’ Sometimes they say: ‘shame on you! You poor people are very

bad. You have no character. Your character will not be good even after washing

with soap and detergent.’ We cannot put up with their insults. Paying money is

better than bearing their slander to save honor [samman].”

Microcredit programs have been a thriving success through capitalizing on the women’s

vulnerable social position47, and their traditions of being submissive to their male counterparts.

Women can easily be disciplined by incorporating them into the regulative process introduced

by the NGOs through the microcredit mechanism. Almost every woman client of both Grameen

Bank and BRAC has maintained that microcredit programs have imposed serious control over

the borrowers in order to keep the recovery rate high which, at the same time, helps expand the

coverage in the broader areas. In this case, providing credit to the poor women is the best

possible way for the success of the programs where women’s cultural values have been taken

as strategic point for regulation and manipulation through the management of credit. In this

entire process women are the subject of regulative practices of microcredit programs. Women’s

shame and sense of prestige has been used by microcredit programs as mode of discipline which

has made them more obliged to the NGO-norms of being regular and systematic. Karim (2008)

in her pioneering study indicates how microcredit NGOs use shaming as an instrument of social

control of poor, particularly poor women for the furtherance of capitalist interest. Women are

the traditional custodians of the honor and shame of the family and give highest priority to

uphold these codes, which are instrumentally appropriated by the NGOs for the recovery of

47The level of vulnerability among poor women is different from that of the educated middle-class women. While

poor women are economically vulnerable, the educated middle class women are social and culturally vulnerable.

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loans. This way microcredit programs have reached even the remotest regions of the countryside

where no other financial organizations are available to offer so-called non-collateral loans to

poor people. This field of opportunity has provided the basis for microcredit NGOs to go

unchallenged and created an enabling environment for dealing microcredit programs with the

poor to reap the highest possible profit. Moreover, most of the women fear losing membership

from the group due to non-regularity of the repayment. As a result, they try to adhere to the

norms and code of conduct set for the borrowers to maintain continuity in repayment even at

the cost of sustaining severe psychological stress in order to avoid official sanctions. One of my

respondents named Piara (age 45) of BRAC said:

“We pay back installment due to fear of prestige [Ijjat]. We do it lest other people

should hear it. Honor is greater than life. Paying back money is my gain. It will save

my face in front of others. I think again if I do not pay now, next time I will not be

given loans. So I do not let my book have a red scratch. Having red marks in the book

is not good for the clients.”

During the loan collection day in the center, poor women who have borrowed loan were

observed to have been very humble in front of NGO officials because being a loan defaulter is

an offence to them, and therefore, arguing with the field staff is a violation of both official as

well as societal norms that increases the likelihood of tarnishing their images in the community.

Taking the advantage of rural women’s cultural traditions NGOs adopt an authoritarian

disposition while collecting installment from the clients. No considerations are given to request

for deferred payments. One of my respondents, Abida Begum (age 40) of Grameen Bank has

said with regard to the recovery of loans by NGO workers:

“If I cannot repay the loan, Sir [NGO worker] comes and sits in the house. If there is

no money then he tells me to sell ducks and hens if there be any, and pay the money.

He will continue to be sitting until the night. Due to fear of shame and disgrace [lajja-

sharam o opomaner voye] I try to keep the repayment ready beforehand if possible.”

The loan-borrowing women pass their time in fear due to their inability to manage installments

amount in time. The degree of fear and tension escalates as the repayment date approaches. The

main fear that grips them is the insult and disgrace they potentially face. NGO officials call the

clients in the center and use profanities in front of others so that the rest of the women present

learn of the consequences of defaulting. They do it intentionally in order that everybody remains

aware of their responsibilities for repayment. While talking to the NGO workers of both

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Grameen Bank and BRAC they shared with me that using rough language is simply a strategy

to make women more amenable to the disciplinary processes of the NGOs, which has left a

negative impact on their lifestyle and has changed their mindset. It is found in the study villages

that traditional values of poor rural women have functioned as the main forces for microcredit

programs and have instrumentally been harnessed for the purpose of recovering loans. In this

case women are the strategic choice of microcredit programs, while men are strategically

excluded. Rahman (1999) in his study on Grameen Bank also similarly found that they select

poor women for the convenience of the programs given women’s social and cultural context in

the greater society. He argued that poor women were conducive for the targeted operation of

the programs because men were regarded as being more arrogant and difficult to deal with.

Moreover, women tend to be shy and submissive, and are more easily traced. Discipline is

therefore more actionable on women rather than men (Rahman, 1999). Women as social

subjects can easily be disciplined and controlled for achieving the economic ends of these

microcredit programs.

Furthermore, the group-based loan-delivery system has been an appropriate technology for the

surveillance of clients, binding them under tight regulation. It has diminished the potential

performance and prospects of credit for yielding the best positive outcomes on the life patterns

of the poor in the long run. Besides, the timely repayment of loans by the poor women is a

defense against the traditional honor code of family, prestige and shame. All women in the

context of Bangladesh, particularly in rural society pass through same experiences of feeling

prestige, honor and shame irrespective of their class position. So in this case, microcredit NGOs

can easily capitalize rural women’s shame and prestige as a disciplinary technology of power

for regulating the financial behavior of poor clients. Discipline is a means of control and a

method of domination (Foucault, 1977a), which can easily be conducted on women to secure

the highest rate of loan-repayments from them.

6.6. Group and Permanent Resident as Surveillance

Group lending has gained much currency in many of the microcredit programs – particularly in

the programs of Grameen Bank and BRAC – because of its capacity to reduce loan risk and

expand the programs in new areas of opportunity where microcredit programs are the only

competitors of themselves. It is already mentioned in the preceding section on social capital that

microcredit programs prefer to form women’s self-sleeted group before offering loans. The

formation of self-selected groups is the major strength of microcredit programs by which NGOs

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have been able to ensure the maximum recovery rate from the poor clients. In the entire process

of the formation of groups certain motives have been nurtured by the program workers that prop

up their financial interests with the exponential growth of credit markets in the typical rural

areas. One of Grameen field managers has said, “A group is a surety. It is a collective

responsibility. Group members work for one another for their own interests. The interest of

getting further loans.” Therefore, a group is a security. It is functional. A group acts as

surveillance for members to watch other members in the group. It is just like the panopticon

observing the movements of other clients of the group so that everybody comes under constant

scrutiny and nobody can escape the area without repaying their loans to the NGOs. If any

member default, other members of the group put pressure48 on the defaulters for their own

interests. Therefore, watching over other clients in the group is a good strategy for microcredit

programs to ensure the return of loan money from the clients, thereby keeping the financial

portfolio of the programs on target.

The surveillance technique in the microcredit programs is not only applied to clients at the lower

level, but also at the workers level through continuous observation by the management authority

of NGOs. The higher authority keeps the middle-and bottom-level staff of the organizations

under close observation by applying multistage surveillance. In this process, clients are being

observed by the group members in order to safeguard their own interests. The whole process is

one of surveillance for observing and regulating the behavior of the clients so that nobody can

escape the eyes of the NGO authorities, and thereby are forced to conform to the disciplinary

norms of the programs. Disciplining the clients though continuous surveillance is an

extraordinary technique of power that provides the procedures for coercing the individuals

[clients]. This hierarchical surveillance ensures the relations of power and visibility of the

clients (Foucault, 1977a; Escobar, 1995) through subtle observation without their knowledge.

I posed the question: why microcredit programs supports the formation of groups before

offering loans, and one of my respondents told me that, “a group binds five women together,

each acts as a witness for another so that nobody can leave without paying back the money.”

Therefore, the group policy of microcredit programs effectively functions to control and direct

the movements, along with identifying the spatial location of the clients. Through the group-

48 Groups are an NGO strategy by which timely repayment is ensured by the clients. NGOs have instructed the

clients to collectively mange the timely repayment of installments. If one group member fails to pay up the

installment other members are obliged to pay for her in order to avoid the risk of group default. Poor clients,

however, for their own interests pressure other members to pay the installment in time which in turn causes

conflicts among the members. (See more details in social capital section).

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lending technique credit-borrowers have been kept under serious observation by a veiled system

of surveillance. A group is like a technology of surveillance by which the clients are exposed

to visible observation and keep other members aware of repayment dates, and at the same time

watches one another with regard to their regularity in the repayment practices.

Moreover, NGOs do not offer credit to women living in a rented house or who are not permanent

inhabitants of the locality given the possibility that they may flee the area before paying back

the loan. In rural society it is rare to find people who live in a rented house. Because culture

does not favor inviting strangers to live in the same house where women and girls live under

the same roof. Since there are few outsiders who come to the study villages for employment or

gainful economic activities, it is rare to find rented houses. An exceptional case was found in

the Chatal village, where a few people from other economically downtrodden regions migrated

to live, but none of them were the clients of microcredit programs. There were no rented houses

or outsiders in the Kazirgaon village as this was more remote from the city. It is an interesting

point to mention here that local residents living in the narrow radius of the neighborhood act as

a surveillance for the guarantee of loans, and “this surveillance is based on a system of

permanent registration” (Foucault, 1977a:196). If poor women, who are willing to take loans

from Grameen Bank and BRAC, have no permanent residence in the village they are not offered

loan due to security reasons. There are some reported incidences of poor women leaving the

village without repaying if they are not the local residents. For the local residents, there is a

lesser likelihood of them leaving the village. They mostly live in their husbands’ ancestral

homes, which becomes their permanent abode. This is a very typical case in the context of rural

society in Bangladesh, particularly in the study areas. Microcredit NGOs take the issue of local

and non-local residents into account in ensuring the maximum security of loan-repayments. I

asked my respondents why loans are not offered to tenants and unmarried girls in the village.

One of the credit clients of Grameen Bank named Gulecha aged over 41 furnished her opinion:

“Only a few people live in rented houses in our village. If some of those people want

to borrow they are not given loans. NGOs do not offer those loans because they may

leave the village without paying the money back. Besides, unmarried girls are also not

given any loan, as they go to the husband’s home after marriage, which causes

problems for the repayment [kisti]. They [NGOs] do not take the risk of offering loan

to floating people. Those people cannot be watched and controlled.”

This statement is clear indication of the strategies employed by microcredit programs, which is

applied for the recovery of loans and maintain the clients by setting a social surveillance in

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which process the temporary residents and unmarried women have no place given their

residential and marital status. If the clients are non-residents living in a rented house they might

be going away from the village putting other group members at loan risk, which is regarded as

potential threat for the sustainable group-lending processes developed by Grameen Bank and

BRAC in my study areas. Generally, people renting housing are assumed to have less

commitment to local residents, which might exacerbate the moral hazard of the tenants.

Furthermore, such people are assumed to not be as familiar to and with all other women in the

area given their temporary inhabitance status. Women having permanent residential status on

the other hand have a much greater psychological attachment to fellow members in the

neighborhood. Consequently, they are unlikely to do anything that violates the citizen code of

conduct. Local residents know everyone and cannot escape the eye of others. They live within

proximity of sight, which enables them to keep an eye on other female clients. Similarly,

unmarried girls are also considered temporary residents in the neighborhood given their marital

status, which leads NGO workers to exclude them from the programs to safeguard the financial

interests of the organizations. This reason is supported by NGO workers in the view that if

women leave their parental homes without paying the loan money back the latter face problems

regarding collecting repayment, thereby putting their position at risk in the institutions. When I

talked to NGO field staff they also confirmed that giving loans to temporary residents such as

tenants is not the policy of microcredit programs for the likelihood that they might abscond on

the sly without repaying the loan.

Likewise, microcredit programs also do not offer loans to widows and people aged over sixty

years. Widows most often have no income-generating persons and cannot make financial

contributions to the family. As women are not employed in any economic activities they are

naturally not able to earn money like that of a male person in the family. This is something that

microcredit programs take into particular consideration so as to avoid financial losses being

incurred by the programs. Besides, elderly people (aged over 60) are not offered loans given

their physical and (lack of) employment status, although they deserve to be the clients of the

programs considering the difficulties that they are likely to face (given their frailties). It is also

difficult for programs workers to put pressure on such clients49, especially since such people

cannot systematically be controlled due to their liminal social position.

49 In some cases NGOs offer loans to widow if she has income-generating people in the family like adult sons.

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6.7. Savings and Deposit Books as Surveillance and Discipline

From the information given by my respondents, it can be summarized that microcredit

programs force poor clients of the programs to save money that apparently seems to be a good

practice from the salutary perspective. How and why microcredit programs have obligated50

poor women to save money for the NGOs is a point of investigation. It has already explained

that the poor women interested in borrowing loans from NGOs primarily need to register for a

savings and deposit book to be regularly maintained by the clients for the entire loan-repayment

period. The book is an official record preserved and maintained by the NGO officials in order

to confirm the continuity of the payment of installments. All women who take loans commonly

know this book – which they strive to update and account for regularly – as boi51. A savings

and deposit book is a documented form of calculating the amount of money paid in installments

at various phases, which ensures the regularity of the clients in the loan collection and

repayment processes. Poor women who once had no scope to save money now have at least

developed the norms of savings. Besides, NGOs are also drumming out the Deposit Pension

Scheme (DPS), which is meant for the wellbeing of the clients. The clients have to maintain

savings and deposit books that they use for saving money and, therefore, are happy. Through

these savings and deposit books NGOs examine the clients’ activities within the repayment

processes, which is a kind of surveillance for watching out the clients. Foucault (1977a) in this

regard argues that “the examination that places individuals in a field of surveillance also

situates them in a network of writing; it engages them in a whole mass of documents that

capture and fix them. The procedures of examination were accompanied at the same time by

system of intense registration and of documentary accumulation” (Foucault, 1977a:189).

Similarly, a book is an indicator of the whereabouts of the clients, and has potential to identify

whether clients have paid the installment in time. The absence of a book means the absence of

borrowers. Likewise, the savings book not only keeps a financial record of the clients, but also

works as a system of information and performance indicator of them which creates new forms

of power and governance, and new kinds of subjectivities (Shore and Wright, 2015). Most often

the book is more important than the person, because the book bears testimony to the clients’

50 NGOs compel all their clients to open an account in the office to deposit money, which actually functions as a

preemptive measure to prevent loan defaults. Even before borrowing the loan, clients have to deposit money in

the NGO account before the loan is disbursed to the clients. 51 . The Bengali word boi means book in English. Every client of microcredit programs has to keep a book for

the recording of repayment, savings, and deposits. It is popular referred to as boi among the microcredit clients,

as it determines the repayment regularity of the clients, and their subsequent financial behavior.

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regularity in making repayments. A book is a powerful guide that enables the imposition of

control upon the clients. In this case one of my respondent’s remark is quotable here:

“The book [boi] is more important to them [NGOs)]. They can understand by the book

that we are paying the installments regularly. Sometimes we cannot go to the center for

paying the installment in person. In this case we send the book with installment money

by way of the other. The presence of the book in the center is similar to the appearance

of the clients.”

The savings and deposit books have the power to bring the clients of the center on the

repayment date independent of whether the clients are able to pay back the amount. Every

client has to maintain two books at one time for loan collection and repayment, which not only

has put poor women under a system of surveillance, but also has bound them by an unseen

disciplinary power for appearing at the center meetings arranged for loan collections. It is learnt

from the respondents that if any member fails to appear at the center in person for paying the

loan, she has to send the book with repayment by way of other members of the groups with

their signatures. In this case books are important entities that bear the official record of payment

made by the clients; the individual himself is seemingly less important. Nonetheless, the clients

cannot continuously be absent from center meetings. Savings and deposit books act as records

and disciplinary technology for the clients who have to maintain that from the beginning to the

end of the loan collection and repayment processes. The power of the books is invisible but the

physical appearance of the clients or the books at the center is compulsory, thereby integrating

the female clients into a disciplinary system. Therefore, disciplinary power is exercised in an

invisible way, while at the same time it imposes on the subjects a principle of compulsory

visibility which assures the hold of the power being exercised over them (Foucault, 1977a).

The system of ‘book-keeping’ (Foucault, 2008) bears the track record of clients, thereby

helping NGO workers to identify the good and bad clients as a form of reference. It also

functions as a means of control over the clients, which aims at increasing the profitability of

the programs by maximizing recovery. A good book functions as a point of reference for the

clients as well as a mechanism for the microcredit programs to ensure the repayment in a

rigorous disciplinary process. A book keeps the financial records and also has the power to

trace the clients indicating whether clients are regular in their transactions and pay the loans by

the arranged time frame set by the NGOs. This ‘saving practices’ in a prescribed book is a

system of ‘auditing’ the clients, which is a form of “government” to which the clients are

subject (Rose, 1999), and a technology for producing calculative, responsible and self-

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managing subjects (Dean, 1995, cited in Shore & Wright, 2015). The next course of action is

set for the clients in the form of positive and negative sanctions following the status of the

books (labeled as ‘good book’ and ‘bad book’ indicating ‘good clients’ and ‘bad clients’) in

terms of their repayment performances.

6.8. Punishing the Poor: Default and Drop Out

Why microcredit is offered to poor women is more or less a settled issue, though controversies

are still revolving around the academic circles about the intention of microcredit programs

centering on the credit delivery and management mechanism practiced by the NGOs.

Microcredit programs claim to focus upon the mainstreaming of women in development

because of the latter’s relatively disadvantaged social position, poverty and vulnerability in

comparison with their male counterparts. The idea of microcredit initiatives for the development

of poor women to integrate them into income-generating activities has widely been accepted as

a good strategy for the alleviation of poverty and for their empowerment. But the claimed

successes calls into questions why microcredit programs punish poor women if they default,

resulting in drop outs from the programs. An attempt has been made to explore why women

meet severe consequences when they cannot make repayment or end up dropping out of the

programs.

In this subsection of the analysis, I wanted to find out the obverse side of the issue by addressing

some relevant questions that critically scrutinize the main factors underlying these phenomena.

In fact, I asked my respondents about what disciplinary measures NGOs take if any members

of the programs default and cannot maintain the regularity of repayment. At the same time, I

also asked whether NGOs remit loans if someone cannot repay. The majority of respondent

women said that NGOs do not take their problems into account when they run into trouble

making repayments. Rather, they force clients to make the repayment, even by taking

households items belonging to the clients. Moreover, they deduct the required amount of

installments from the deposit and make the adjustments of the loan and finally drop the clients

out of the programs after all of the loan has been repaid. I also asked microcredit field workers

of both Grameen Bank and BRAC what necessary steps they adopt when clients default, and

what they do to retain them in the programs given that development of the poor is the main

objective of the interventions. In the same vein, I also asked whether they exempt any clients if

they are completely unable to make repayment. One field manager from BRAC put forward his

opinion with regard to the issue as:

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“We deal with a variety of poor people. There are some bad clients in the group too.

They are like germs. Nobody can go with the germs. One will spoil others. So we leave

them out in order to be free. We do it for the betterment of our programs. We try our

best to collect the required amount of loans. Then we make the adjustment from the

deposit that the defaulting client has saved. Finally we drop them out. This is also our

strategy to keep the program running. The rate of our success is bigger because of the

rigid policy.”

I wanted to know the opinion of the field workers of Grameen Bank and BRAC on whether

systematically dropping certain clients out of the programs constitutes a form of punishment.

The opinion of one of the field managers of Grameen Bank goes like this:

“If somebody takes a loan from any commercial Bank, she cannot help but pay the

loan. Who has the power to avoid paying the loan? In the case of a default, the Bank

will crack down on the clients, file a criminal case against them and put legal pressure

for the recovery of loan. If one cannot pay money, it is also in this case like a criminal

act and that should be prosecuted like an offence.”

Microcredit programs have some specific rules and regulations that every client has to adhere

to accordingly. Contravention of these rules by any client deserves punishment. In this context,

I questioned my respondents about whether they encountered any legal action by NGO

authorities in the case of repeat defaulters. One of the client women named Nehar Begum (age

40) of Grameen Bank has said, “NGOs threaten to register a case against clients who become

defaulters. Some people in the neighborhood also help them in such cases”. One of the field

managers of BRAC also said, “Local influential people have social power which can be used to

control the clients in cases of default. We try to ensure the recovery of loans by applying our

institutional and social power. Social power is more important and effective to put

psychological pressure on the default clients.” This way NGOs may exercise power over the

minds of the clients in shaping their fiscal behavior and recovering loans when some women

due to severe financial constraints repeatedly fail to meet repayment deadline. Power in this

connection is a process that does not occur in a vacuum. It requires space and interactions, and

contributes to the shaping of individuals’ behavior. Power, therefore, circulates through the

social body and functions in the form of a chain, and is employed and exercised through a net-

like organization (Foucault, 1977b: 98) like microcredit.

Moreover, microcredit programs have labeled women in two distinctive ways for the

convenience of managing credit, thereby helping program managers identify and exclude clients

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from the programs. There are ‘good clients’ and ‘bad clients’ in terms of their repayment-related

performance. Good clients are those who have regular repayment records, keep continuous

installments as per the reimbursement schedule, and have no red ink blemishes in the savings

books. Clients who repay loans on time and who have no red mark in their deposit books are

called ‘good book’ and the clients are called ‘good clients’, while clients who default on the

timely repayment of loans are marked with red ink in the books (bad book), and those clients

are labeled ‘bad clients’. Red marks signify the negative performance of clients, and function

as an alert to remove them from the programs for being defaulters, while a good book designates

the positive performance of women with the reward of retaining them in the programs. Good

clients are rewarded with handsome amounts of loans or other economic incentives in the

interest of retaining them in the programs, while bad clients are forced to drop out. For keeping

the good clients in the program Grameen Bank offers tk. 3000 to them as a reward for good

financial behavior and fair transaction of money. BRAC does not have such provisions to

reward clients in order to keep them in the programs. It is also learnt from the respondents that

microcredit programs place particular importance on those clients already possessing a good

social and economic status to ensure they can repay the loan and complying with the stringent

conditions attached to microcredit programs. While on the other side of the issue, poorer women

have generally been unable to maintain the rigid condition of the programs, and end up

defaulting and removed from the programs. In this context, retaining some clients in the

programs is one kind of positive incentive encouraging some women to stay in the program and

provide them with loan facilities. On the other hand, leaving some poor women out of the

programs is a form of punishment that forces them to be socially and economically isolated.

The statement of one of the Grameen Bank’s clients named Jhumera (age 37) reveals how

punishment to the poor women is meted out:

“NGOs retain the good and old clients. They are given loans by force. They do not let

them drop out of the programs. And those who cannot pay back the installment, they

[NGO workers] somehow manage to get the money and drop them out of the programs.

After getting the money back, they cut their names.”

Keeping good clients who can regularly maintain the payment of loan in the program is a

strategy of microcredit NGOs that considers the financial viability of the programs, whereas

those who cannot pay back loans are meted out punishment by dropping them out of the

programs. As a result, every female client is compelled to pay the installment amount back in

the fixed time schedule in order to avoid the coercion of the program workers. The field workers

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of both Grameen Bank and BRAC have told me that they try to retain the clients in the programs,

but finding no alternative they eventually drop them out. In this regard one BRAC staff has

explained the drop out policy of the program as follows:

“We increase the amount of loans for good clients. It is a positive incentive for them.

Those who are bad clients [defaulters], we try to motivate them to continue repayment

for staying in the program. When there is no way, we drop them out after the recovery

of loan. Drop out is one kind of punishment for the default clients. There is also reward

for the clients having good repayment records.”

The classification of clients in terms of their repayment performance is made by the NGOs based

on their financial behavior that takes the forms of reward and punishment. In this process,

punishment is non-conformity to the rules which disciplinary power seeks to correct through its

exercise. This discipline as a technique operates not only through punishment but also through

gratification, with reward for good conduct or practices, and punishment for bad behavior

(Foucault, 1977a). Both types of sanctions is practiced in the disciplinary norms of microcredit

programs given the fact that disciplinary punishment is essentially corrective (Foucault,

1977a:179). It is also found that the remission of loans for defaulters is not considered, even in

severe cases. Indeed, the policies of microcredit programs do not maintain any provisions of

this kind. However, my field experiences confirm that the main motivations of the microcredit

field-workers in practicing the disciplinary norms for the clients lie behind their accountability

to the higher authorities of rigid NGO-administration, and their positional vulnerability in the

employment territory has a direct effect on the economic behavior and lifestyle of their credit-

clients, further aggravating their life-conditions. The program discipline has an adverse impact

on the lives of many poor women, particularly the majority who struggle to cope with the

interventions. As a result, how microcredit can achieve its stated mission of poverty alleviation

and the empowerment of women calls for a deeper analysis.

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CHAPTER 7

Microcredit in Market Rationality and Regulation of Rural

Financial Market

Bangladesh’s economy is characterized by unfavorable per capita land, low per capita income,

widening income gap, high levels of unemployment, low productivity coupled with endemic

poverty and deprivation (Ahmad, 2007; Kumar et al., 2013). Bangladesh is dominated by the

rural economy (Alam, et al., 2015). A significant portion of rural production is still based on

subsistence farming. Despite this, the rural economy still plays a significant role in poverty

reduction and economic development (BBS, 2014). The majority of rural people is poor (Alam,

et al., 20150, and belongs to the categories of landless laborers, small farmers, fishermen and

rural artisans (BMOP, 2005), where millions of women face social exclusion from partaking

in economic activity (World Bank, 2008). They therefore tend to suffer more than men (Khan,

2001). These people only possess assets with low productivity – if any. They have few relevant

skills, and most often have no regular full time job, or engage in very low paid and menial odd

jobs (BMOP, 2005). Unemployment and underemployment is a fundamental aspect of rural

poverty in Bangladesh (Ullah & Routray, 2007). Due to their lack of access to the market and

formal occupation, along with their limited capacity to accumulate assets for the protection

against future shocks, a significant number of people have remained out of the mainstream of

development.

Taking the issue of poverty into developmental concern, microcredit has been promoted as

helping the poor take up self-employment on the micro-scale with a view to improving their

living conditions (Ahmad, 2007). Microcredit in this regard acts as a capsule for the poor to

heal the wounds of poverty. How microcredit – under the banner of neoliberal development

polices – operates for the advancement of the poor is a question that needs to be answered in

order to understand the effects of credit on the life patterns of its beneficiaries. Therefore, the

main objective of this chapter is to offer an analysis as to why and how microcredit programs

have reached the poor sections of society and become a successful business venture by taking

advantage of the material poverty in my study areas. Besides, how microcredit programs

regulate the economic behavior and lifestyle of poor clients in typical rural areas through

commercial transactions, and how NGOs compete when several NGOs offer microcredit

programs in the same village will be further explicated in this section.

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7.1. Poverty and Regulation of Finance for the Poor

This part of the dissertation seeks to offer an analysis based on the field data and lived-

experiences of the borrowers of microcredit. Credit-borrowing women in my study areas are

forced to borrow loans from NGOs due to the continuous economic crises encountered by them.

One of my respondents from Grameen Bank named Achia Khatun has said about microcredit

programs, “Credit has been created out of crisis. Nobody takes a loan if she does not get into

trouble. When we get into trouble we borrow loans. NGOs take advantage of the needs of the

poor.” Why poor people get involved in microcredit programs instead of borrowing money

from other sources is a critical question. Regarding the informal moneylending market, it is an

open secret business in which poor women have no free access due to socio-religious52 views

held against this system by rural society. Despite this business still functions on a small scale

in underground, avoiding the scrutiny of the masses. Microcredit programs of NGOs on the

other hand have now become socially accepted forms of economic transactions handled

meticulously by the programs workers. Poor women having no alternative means take loans

from NGOs in order to meet their financial needs. No other forms of economic organizations

except NGO-promoted microcredit programs have managed to reach the doorsteps of poor

clients with the offer of money.

Moreover, poor women without collateral have no access to commercial banks. NGOs have

offered them loans without financial collateral (based on so-called social collateral53), though

this does not reflect the full image. The reality indicates the inverse. I posed this question to

my respondents after hearing their critical views about the NGOs: why would NGOs give you

loans against their own interests? One of the clients of BRAC shared her grievances with the

programs: “We borrow loans from NGOs because they are available in the village. No other

bank gives loans to the poor. But NGOs put serious pressure for loan-recovery. It is indeed a

problem for us.” Poor people borrow loans from NGOs because they are the most convenient

52 In the context of Bangladesh, borrowing money from local lenders is not positively seen. Even in the Holy

Quran it is discouraged as it states that god has made business lawful but interest unlawful. Despite this,

moneylending is an open secret. When NGOs started to offer credit, people opted to borrow from NGOs rather

than moneylenders, but the latter continued to exist. Microcredit has therefore fostered a dual financial market in

my study areas–one formal and one informal. Formal markets include the NGO-promoted microcredit programs,

while informal markets comprise local moneylenders. 53 Rahman (1999) uses the term ‘social collateral’ to refer to the group-liability of women borrowing loans from

NGOs (Grameen Bank). It is said that poor women are given loans without physical collateral instead of social

collateral in which case every woman has to bear the responsibility of the timely repayment of loans is utilized.

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and accessible source of quick credit. Rahima of Grameen Bank in Chatal village, gave her

opinion about microcredit in the following way:

“NGOs are doing business with us. Our poverty is their strength [capital]. They come

door-to-door offering credit. When we join the credit program, they change their faces.

They can do whatever they need to do for taking back money. They make tons of money

by exploiting the poor. The rich people make money sitting in an air-conditioned room.

NGOs are getting richer with our money. Nobody understands how they exploit us.

The amount of money we pay as installments is not so big, but gradually we become

destitute instead of becoming better. While the NGOs become bigger, we become

pauperized.”

Rahima was one of the top most senior members of Grameen Bank who has been involved in

the programs for well over 22 years. In one sense she could be said to be the living history of

that village. She had joined the microcredit programs of Grameen Bank when it first came to

the village. According to her, poor women cannot benefit from microcredit programs due to

the excessive financial regulation and the profit-seeking motive of NGOs. The operation and

management of the programs indicates that NGOs have become successful players of

developmental interventions, and have made the reach of the programs extensive through the

commercial venture of microcredit. Bringing women into the credit-market in this way has

specifically been a success for credit-giving NGOs and Grameen Bank (Muhammad, 2007).

7.2. Financial Market in the Untapped Rural Areas and Conflict of Interest

NGOs such as Grameen Bank and BRAC have the maximum coverage of microcredit in rural

areas due to its outreach and success; and while there remain untapped areas, this portion is

small relative to the total number of poor women in the country (Ahmad, 2003; Bose et al.,

2009). I wanted to know why my respondents borrowed loans from NGOs instead of informal

moneylenders. All of my respondents have said to me that they borrowed loans from NGOs

because of their availability and accessibility at the doorsteps of clients with their service

delivery. Borrowing money from NGOs is easier and more convenient than taking from

informal lenders, and informal lenders are not socially desirable as they lend money at

exploitative rates of interest (Hashemi and Morshed, 1997). Moreover, while microcredit

NGOs have been competing with one another through credit programs, the terms, conditions

and regulation policies of the various NGOs are functionally similar.

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As I conducted my study on the microcredit programs of Grameen Bank and BRAC, my main

intention was to accurately reflect how female clients experience being involved in the

microcredit programs of these two NGOs, while supplementary questions related to the cross

borrowing were also posed. I again asked my respondents why they do not take loans from

commercial banks instead of NGOs. In this regard they replied that borrowing money from

commercial banks is problematic for the poor. They argue that conventional banks offer loans

only to rich people and businessmen. Besides, they do not deal with the poor, as they typically

have no assets or liquid cash that can guarantee the security of loan repayments. Indeed,

commercial banks are not even present in rural areas. At the same time, borrowing loans from

local moneylenders is not encouraged for poor clients given the exorbitant rate of interest and

harsh conditions of repayment. If somebody takes a loan from local agents she has to pay tk.

100 per month against tk.1000 with no reduction from the principal amount, which has to be

paid at the end of the year or any time as per convenience of the clients. Until the principal

amount is paid the clients have to continue the payment of interest every month according to

the agreement with the money mongers. If somebody cannot pay the amount of money

borrowed, she has to continue the interest year after year, keeping the principal amount intact,

which makes the clients more vulnerable. For example, if someone borrows tk. 5000 she has

to pay the interest of at least tk. 500 per month against the given amount, and the total figure

would not change until the principal amount is cleared off. As a result, it has been convenient

for poor female clients to borrow from NGOs due to their proximity and the putatively flexible

terms and conditions vis-à-vis local moneylenders.

It is found in the study villages that microcredit NGOs do not have any competitors aside from

other NGOs. It has been reported, however, that some NGOs introducing microcredit programs

to new villages had come into conflict with well-known local moneylenders. Unsurprisingly,

the presence of NGOs’ microcredit programs in the rural untapped market was not welcomed

by many of the local moneylenders who see NGOs as their competitors in the rural money

market. Some of the local people in Chatal village initially spread rumors alleging that NGOs

were non-Muslim agents that had entered the village to convert people to Christianity. In spite

of this, NGOs have been able to maintain their position in the villages with the help of other

influential persons who were not involved in moneylending. One of my respondents of

Grameen Bank in Chatal village named Rahima told me of that:

“When NGOs came here, some people did not welcome it. Several male elders of the

village dissuaded us from borrowing loans. They forbade us to borrow loan. They told

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us that if we took loans, then our bodies would be covered with black clothes after

death. You will be put in the grave wearing black clothes. This is Hinduism [Hinduani].

This is the American business of interest [shudder karbari]. If you die, then the grave

will not receive your body for rest therein. The elders of the village had resisted the

NGOs because they lent money on interest. Their business would suffer losses if the

NGOs come.”

The statement given by a senior participant of Grameen Bank’s microcredit initiatives indicates

that some people had appealed to religious and emotional sentiments amongst the poor women

so as to discourage them from joining the programs. According to Muslim traditions, when

people die they are laid to rest in a grave by covering the deceased body with white coffin

clothes after the holy shower. Although there are no religious prohibitions or significations,

the color black is typically associated with negative connotations, especially regarding issues

of death. Black is the symbol of sin in this context. Aside from this and from the religious point

of view, interest [shud] is strictly forbidden as stated in the Holy Quran. It referred to as

unlawful [Haram]. It has also been said that credit is Hinduani, which means that if people

borrow credit they are implicitly supporting the Hinduism. This is how local moneylenders

attempted to deter poor women from borrowing NGO-credit. Braving such social resistances,

NGOs have been able to entrench their position in the villages and expand their programs even

further for the fact that financialization in the form of microloans can potentially knit

populations more tightly into the fabric of formal credit practices, which as a commercial

practice is capable of drawing on private capital markets (Aitken, 2010).

It has also been reported by the respondents of BRAC in Kazirgaon that NGOs collaborated

with influential local elites in order to entrench their position in the villages. People with clout

in the villages are treated particularly favorably by NGO officials in the hope that programs

can operate unhindered. NGOs also seek cooperation from the local senior citizens, who assist

with recovering loans from clients who repeatedly default. One of the field officers of BRAC

has said, “We take the socioeconomic conditions of the project area into account. It is difficult

to enter a new area without the knowledge of the local elites. We seek help from them so that

we can operate the program without any resistance.” Against this social backdrop, microcredit

programs of NGOs like Grameen Bank and BRAC have successfully survived and become a

common development intervention tool for many of the poor women because of its availability

and (purportedly) flexible borrowing conditions, which does not exist in the informal lending

system. Consequently, microcredit has been accepted as a convenient method of social

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development by its recipients, and has reached even the remotest regions of the rural society.

The operation and management of microcredit with poor clients, however, contributes to the

expansion of financial transactions in rural areas through the offer of new contractual terms

and conditions, and financial services to larger clienteles (Gonzalez-Vega, 2003).

There is also evidence that sustainable and inclusive developmental efforts have encouraged

the existing development agencies to search for alternative means to incorporate individuals

into the market and involve local people in such projects (Fisher, 1997). A field staff of BRAC

reported that NGOs usually avoid operating the programs in regions where communication is

not convenient. This is because NGOs such as Grameen Bank and BRAC consider the local

social and economic context, the prospects of the programs, and the repayment capacity of the

clients when expanding the program coverage gradually to new areas. Microcredit NGOs

therefore utilize the embedded cultural and economic interrelationships to enhance their

success in market-oriented terms of profit, repayment of loans and accumulation of capital

(Lazar, 2004). One of the BRAC field workers shared his views with me regarding the issue

of selecting a new village as an area of credit operation, given the distance and location of that

area. If the area is far beyond the midpoint of the regional NGO office, then they choose an

area nearer the sub-regional office, as going to remoter regions increases the potential risk for

fieldworkers collecting loan-repayments. According to him, distant places are not a problem if

the overall social and economic condition of the village is promising, and if there are

considerable numbers of the clients for the operation of the programs. They verify the current

economic status of the poor by conducting surveys54 before operating a program in a new area.

One of my respondents of BRAC preferring anonymity spoke about the operation of credit

programs in the villages:

“I borrowed loans from BRAC by hiding my address. I live in the neighboring village,

which is poor compared to this village. NGOs do not offer credit programs in my

village. I bribed the center-chief with tk. 500 to convince the field officer for offering

me a loan. Now some of the women also take loans from BRAC operated in this village

because there are no credit programs in our village.”

This statement is indicative of the commercial nature of microcredit programs, and this is not

the only case where clients end up offering bribes to center-chief in seeking approval for loans.

54 NGOs conduct surveys before offering credit programs in a new area, which includes the current economic

conditions, income, assets and other valuables in the possession of potential clients, including the number of

family members and income-earning persons in the family.

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About 33 % of the respondents from two centers of BRAC and around 29% from both centers

of Grameen Bank reported that they have to bribe the center-chiefs in order to secure a loan.

However, the programs consider the demand-side before reviewing the supply-side to ensure

the feasibility of the programs in the credit market. Poor women in this regard have no other

alternative but to borrow from NGO-provided microcredit to support their needs. NGOs also

have forwarded directives for the field managers to increase the program coverage. One field

officer of BRAC has said, “The policy of the institution is to increase the coverage. The

expansion of the market is to increase the market portfolio.” Aitkin (2010) has argued that

microcredit is finance capital that is to be invested in micro-markets with macroeconomic pay

off. It is an attempt to integrate poor populations who have no access to credit fully into formal

fiscal practices, and is also an experiment in fitting microfinance into global financial markets

as an investable asset. One of the field workers of Grameen Bank was asked: Do you think that

NGOs are marketing credit to the poor? He has said, “Of course, this is a credit market. It is a

business, not a charity. Commercial banks are not giving credit to poor people. We are going

to them with the credit. It is an alternative financial market for the poor.” Microcredit,

therefore, has been an alternative financial intervention specially designed for the poor, which

suits their needs in terms of their current employment and income status beyond the

conventional banking system. Consequently, the rural poor in Bangladesh have become an

appropriate agent and target group for the profitable investment of credit, aimed at the

expansion of markets to broader clienteles.

7.3. Market Rate of Interest and Hidden Charge: Lack of Consciousness?

Microcredit programs claim to provide financial and nonfinancial services to the poor –

particularly poor women – under certain terms and conditions followed by the clients in order

to access these facilities. It has already been mentioned in the foregoing section that NGO

microcredit programs have been providing credit services to the doorsteps of poor people,

which the conventional banking system excludes due to their lack of collateral. The main

objective of microcredit is actually to alleviate the poverty of the poor by easing their

constraints in the credit market, thereby generating self-employment and increasing the

productivity and earnings of the poor (Latif, 2001). Moreover, NGO policy has an aim to reduce

the gender-gap for sustainable social development. How poor women get implicated in the

financial system of Grameen Bank and BRAC in two villages of Bangladesh is a question that

I shall seek to answer. Poor women take loans to satisfy the immediate needs of the family. In

this regard it can be said that when money is needed to weather a crisis, nothing is more

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important than obtaining this means to survive. I have found among the credit clients in my

study villages that are often unaware about how much money they pay back grossly to NGOs

relative to the amount that was borrowed. The amount of money borrowed has to be paid in

forty-six installments in a stipulated year. In this case NGOs take six installments more than

the given amount.

Moreover, clients have to deposit 10% of the loan they apply for, which is a preemptive

measure adopted by NGOs as a guarantee of loan. Approximately 69% of the respondents both

from Grameen Bank and BRAC have reported that they are not given any interest for their

deposit, while rest of them could not say anything about the issue. The issue of the interest rate

of NGOs calls for a deeper explanation in order to ascertain the intentions of macro-business

with microcredit. I cite here the example of one respondent named Dilara (aged 40) who took

loans from Grameen Bank in Chatal village. She borrowed tk. 50, 000 (around $ 650), which

has been paid in 46 installments in a stipulated year. She had to deposit tk. 2000 in advance as

security for the loan, though it is claimed that credit is given to poor women without collateral.

Therefore, collateral-free credit simply reflects program rhetoric in a bid to garner national and

international attention, rather than the actual reality. Dilara told me that she has to deposit tk.

100 per week amounting to tk. 400 a month which amounts to tk. 4800 a year, while depositing

tk. 200 a month for the deposit pension scheme (DPS), totaling tk. 2400 in a year. The total

sum of savings and DPS repaid to the NGOs by Dilara is tk. 7, 200. Against her loan of tk.

50,000, she had to pay tk. 1,350 per week as installments, with the total coming to tk. 5,400 in

a month. After the full payment of money over aggregate 46 installments the total figure stands

at tk. 64,800, which is tk. 14,800 more than the principal amount initially disbursed to her.

Here the rate of interest of NGOs is calculated to be around 30%, while commercial banks55

charge around 16%. So the rate of interest of NGOs is nearly double than that of the commercial

banks. I have cited here the most typical example and experience of a borrowing client, which

represents the general predicament of the poor clients. Almost all the women under Grameen

Bank and BRAC programs had similar stories to share. According to the estimate of NGO-

workers, they charge only 20% interest against the loans they offer to the poor women. The

difference between official estimates and my own calculations is nearly 10%. It has been found

that while the interest rate charged by NGOs is below the rate offered by local moneylenders,

it is well above the market average for commercial banks. Rosenberg (2007) in this connection

55 I talked to a manager of Sonali (government) Bank in my University to find out the average interest rate.

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opined that the “higher charges to borrowers correlate directly with higher profits captured by

investors, including private investors” (p.10). Therefore, primary investors earn the highest

profits from their investment.

Likewise, poor credit-borrowing women have to deposit money in a savings account and for

the DPS, for which NGOs do not pay a reasonable amount of interest to the clients. Almost all

of my respondents have admitted that they do not know how much money NGOs take from

them as interest. The clients are unaware that NGOs have been taking more money from them

relative to the loan amount, and many do not even know how to calculate the interest rate. Due

to the lack of proper education and accounting knowledge, their husbands also do not know

how to calculate the interest rate. I quote Dilara’s statement again with regards to her

knowledge (or lack thereof) about the interest rate:

“I have DPS and savings. I do not know how much the interest rate of NGOs is. I do

not even know how much interest is paid against the savings. DPS has to be intact for

twelve years. If somebody wants to leave the programs after paying back the loan, she

is given only the principal amount, not the interest.”

Not a single woman that I interviewed could say whether they had been given interest (as per

their calculations) for the amount of money they deposited in the NGO account. NGOs take

full advantage of poor women’s ignorance about these economic transactions. Their lack of

accounting knowledge regarding financial transactions works in the NGOs’ favor, and thus

enables them to exploit poor clients, as most are unfamiliar with the various calculations and

the actual rate of interest. NGOs also apply hidden charges to the clients; these miscellaneous

expenses are incurred when opening a savings and deposit book, purchasing stamps and pens,

which typically costs around tk. 500. On the other hand – and although giving money to the

center-chief is not mandatory for clients – she is often given around tk. 500 for expediting loans

for eager clients. Nearly 35% of the respondent women reported that they have to pay money

to the center-chief when seeking recommendations for loans from the NGOs. 20% of the

respondents informed that they usually pay around tk. 1000. I found a gap between the words

of NGO workers and the clients about the charges levied for loan disbursements. While NGO

workers concede that they apply the bare-minimum service charge for clients, almost every

respondent insisted that such service charges are exorbitant and unnecessary.

In similar fashion, Shimul from Grameen Bank’s program in Chatal village opines, “We are

not given any profit for the savings. They [NGOs] give that money to other people as loans

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from the profit they make. They make profit against profit.” The statement indicates that poor

women have different opinions and sometimes do not have clear idea about whether NGOs

give them interest against their savings and DPS. Even NGOs have not clarified the issue about

the rate of interest and amount of profit given to them against their savings and DPS. As a

result, there is confusion amongst the clients about the savings and deposit scheme, and

whether it is there to protect the interests of the clients. Some of the women feel that NGOs

have only been increasing in size and gaining profit by exploiting poor people and their money,

but they have nothing to do because of their social and economic condition. Shimul of Grameen

Bank member has put her straightforward opinion again as the following:

“NGOs make profit. They can make 100 taka by taking 10 taka from 10 persons. They

offer loans according to their vantage and take money back bit by bit. But at the end, it

becomes huge. They keep money from us for savings on account of their security and

profit.”

The poor people have no concrete idea about how NGOs engage in financial matters with

them. A majority of the women have said that profit and losses is not their concern so long as

they exist in a condition of necessity. Poor women have to repay small installments to NGOs

bit by bit, but at the end it snowballs into a significant amount. The reasons why NGOs use

small installment-repayments are twofold: One is to reduce repayment pressure, and the other

is because taking small amounts of money each time from clients ensures that they are less

likely to realize the actual total amount that ends up being repaid.

Microcredit NGOs have developed a successful strategy for engaging in economic

transactions with the poor, and have been able to formally incorporate sections of the rural

poor into their credit operation and management systems. Furthermore, given that the rate of

interest56 imposed by informal moneylenders is too exorbitant (approximately 120%), NGOs

have found a renewed impetus to offer their credit services at the doorsteps of the poor. The

lack of economic institutions in the villages that could offer “collateral-free” loans to the poor

further ensures their dominance and monopoly over the rural credit-market. Poor women who

participate in microcredit programs often continue in the programs for many years despite the

lack of significant improvements to their life chances. Indeed, the question of how NGOs

56 If somebody borrows money from local moneylenders she has to pay tk. 100 per month against tk. 1000. The

borrowers have to pay the interest rate until the loan is paid with the principal amount being intact.

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calculate the interest rate (which they claim to be “attractive”) against the savings and deposit

of the clients’ needs to be further investigated.

7.4. Interest against Deposit and Savings: Much Ado about Nothing?

Credit is offered to poor women following the general system of economic transactions

according to commercial rates. But it is not immediately obvious how much interest is given

to the clients by the NGOs relative to their savings and deposit pension scheme (DPS). In this

connection, I have contradictory information coming from clients and NGO workers about the

effective interest rates. According to a majority of the respondents, they are not given any

interest, or at least they are unaware of it. Grameen Bank and BRAC field staff, on the contrary,

claim that they pay interest to their clients relative to the savings and deposit scheme. The

respondent women have alleged that NGOs have use the savings and DPS money to circulate

money in the market, and that the amount of interest given to the poor clients is not

proportionate to the amount deposited. Having replaced to some extent the practice of informal

moneylending in rural areas, NGOs take advantage of the non-availability of financial services

in the villages to further entrench the operation and management of credit programs. However,

this forces clients to engage in cross-borrowing to meet the weekly installments due to

repayment pressure.

A majority of the respondents argued that borrowing loans from local lenders is more

convenient than borrowing from NGOs because of their ability to provide loans that suit local

social conditions.57 While interviewing the BRAC field workers, I came to learn that BRAC

offers 6% interest against the savings and deposit scheme, which is given back to the clients

when they complete the total repayment of the loan at the end of one year. If a client, for

example, takes a loan from BRAC she has to pay approximately 30% interest for the borrowed

amount, while BRAC gives the clients relative to their savings and deposit scheme a flat rate

of 6% interest, which is five times less than the NGO interest rate charged for the clients.

Grameen also follows a similar method for calculating the interest rate.

NGOs have been beating their drum to attract poor people to join the savings and deposit

scheme given that the poor rarely have the opportunity to save money. Participants become

involved in these microcredit initiatives, but after joining the programs things begin to spiral

57 In order to borrow loans from NGOs, potential clients have to undergo a tedious process – including official

formalities – creating annoyance for them. Apparently, the repayment pressure is less if they borrow from local

moneylenders. Poor women can repay the loan once in a month if they so desire.

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out of control. Microcredit is like a sweet ball for the poor people before it is eaten, and it starts

to taste bitter after they swallow it. The resounding success of microcredit programs depends

on the clients’ loan-repayment performance, while the other aspect of the programs’ financial

sustainability relies on the money deposited by clients in the savings and deposit pension

schemes. The declaration of NGOs about the profit given to the clients appears to be much ado

about nothing; in reality the amount is rather trifling, and it is not even in proportion with the

actual amount of money deposited. Exploiting the ignorance and apathy of the rural poor

appears to be a profitable strategy for some of the NGO-run microcredit initiatives.

7.5. Regulating Movement and Consumption Pattern of Clients

It is said that microcredit has enabled poor women–who due to cultural and customary practices

of society tend to be confined to the home–to have greater mobility. The success of microcredit

programs in this sphere lies in the fact that it has brought women out of the family precinct and

into the domain of the public through activities such as visiting the NGO office (See Kabeer,

1998; Mahmud, 2003). It is true in the sense that they have to go to the local loan center for

repaying the installment and also to the NGO office for borrowing the loan. Other than these

two specific activities, the mobility of women has in fact been restricted due to the stiff rules

and regulations of the microcredit programs. Repayment on a weekly basis is a regular practice

of microcredit programs, which every client has to maintain very strictly without exception.

It is found in the study villages that the credit clients have to make sure they repay their loans

if they want to leave their homes to visit the relatives or for other purposes beyond the

community. The clients have to seek permission from the center chief if they want to visit their

relatives, and can only proceed after confirming the payment of the stipulated installment

amount to the center-chief along with the deposit book. Clients who leave their homes without

the permission of the center chief and who fail to have their installments ready are called in

from wherever they live. Microcredit programs in this way have regulated the movement of

women beyond their neighborhood to guarantee the recovery of loans. Such restricted practices

limit their access to various social spaces and hinders their normal day-to-day movements.

Thus the loan recovery and management system of microcredit programs may be conceived as

a technique for governing the clients, which has brought extensive success for the NGOs and

brought all client-women into a narrow space of society in a systematic way. NGOs are playing

an increasingly important role in the process which Foucault calls ‘governmentality’ (Bryan,

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2002). Therefore, regulating the movements of women is one of the strategies to make them

docile and submissive to the official rules and regulations of the NGOs.

Even the consumption patterns of poor women have technically been controlled by NGO

workers and the next-door neighbors of the clients. I asked my respondents: How do other

people react when you eat good food or entertain guests, even though you cannot pay the

installment in time? One of my respondents of Grameen Bank named Shimul shared her

experiences in the following way:

“We rarely invite guests. If somebody comes unexpectedly, we have to entertain him

or her with some food. People [neighbors and clients] verbally abuse us when guests

visit our home and something is prepared for them. They say: ‘you are cooking good

food for guests and entertain them but cannot pay the installment. Why have you

arranged so much food for them?’ They are the NGO workers and local people who

are the members of the group. The people of the neighborhood even badmouth us

because of this. NGO workers behave very badly. We have to swallow their insults.”

In the rural society of Bangladesh people tend to be hospitable, and they welcome guests who

may visit their homes on any particular occasion. Poor people are most often not able to arrange

a variety of delicacies for guests, but they still try to cook some good food. Microcredit

programs appear to have limited their clients’ choices by imposing social restriction on them.

The main reason why microcredit programs have controlled the consumption patterns of the

poor is to ensure the timely recovery of loans from the poor clients regardless of whether they

have their ability to afford food. At least 9 out of 49 respondents have reported experiencing

such incidences.

7.6. Governing Clients through Mobile Phone

Nobody can doubt the fact that mobile phones have become one of the most effective

communication technologies today. A mobile device ensures that information can be

transferred to a large body of people within seconds, and the location of the bearer can easily

be detected. It is found in the study areas that mobile phones have been successfully used to

trace the whereabouts of clients to identify whether they have been making regular loan-

repayments. This controlling mechanism has been found in the case of Grameen Bank. Their

microcredit program obliges clients to buy a mobile SIM when they undertake a loan. NGO

field workers whom I spoke to admitted this, but claimed that this was just an experimental

initiative of Grameen Bank, and not the part of the general microcredit policy per se. But it is

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not known whether this policy of selling mobile SIM to clients is prevalent elsewhere in other

Grameen microcredit programs. BRAC also took some similar initiatives, although currently

the policy is not in operation due to concerns raised by the clients. According to respondents,

Grameen Bank takes tk. 250 for a mobile SIM (which sells for just tk.100 in their designated

outlets in the city) even though it is tk.150 more than the market price. BRAC once sold clients

a mobile phone costing tk. 1000 in order to have continuous observation and regulate the

movements of their clients. While Grameen Bank is a partner of the Grameen Phone mobile

company; it is worth mentioning that BRAC has no such affiliations.

Approximately 26% of respondents feel that Grameen Bank has been selling mobile SIM to

clients for their own interests. Selling mobile SIM obviously is motivated on the one hand to

generate profit, and its secondary function is to regulate the clients in order to know whether

they have been following the repayment schedule. As most of the poor women do not have

mobile phones, therefore making it difficult for NGO workers to communicate with or trace

their clients at any particular time. Having a mobile phone is the easiest way to communicate

with the clients in case of necessity, and hence has reduced the physical distance between NGO

workers and the clients. Mobile phones may therefore be conceived as a new governmental

strategy of microcredit programs in order to keep the clients under close supervision and govern

them at a distance to ensure the successful recovery of loans by the repayment date. A mobile

phone functions as a technology for regulating its owner through network surveillance. Now

in the rural areas Multinational Corporations like Grameen Phone Company have been

reaching out to poor customers by way of microcredit programs, although a fair number of

rural people possess mobile phone. The basic difference between having a mobile phone out

of personal choice and selling the same for specific institutional reasons remains in the

economic purposes to be served by the microcredit NGOs. Grameen Phone (GP) is the largest

mobile company in Bangladesh and is a joint venture with a Norwegian telephone company

called Telenor (Muhammad, 2009, 2015; Karim, 2011), which has been operating mobile

communication networks in many countries of the world including Bangladesh via its

indigenous name Grameen Phone. Microcredit has been promoting this multinational business

in the remote rural areas through the operation of credit, while looking at the needs of the clients

and serving the commercial purpose of the organizations. The experiences that the poor women

shared with me during my stay and interviews with them in the villages indicate that not a

single woman has bought the mobile SIM willingly; rather they have to buy it for the sake of

complying with the conditions imposed by microcredit field workers. Almost all women

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reporting the case were aggrieved with the Grameen Bank field workers for compelling them

to buy a Grameen mobile phone SIM. Thus the newfangled policy has contributed to the

promotion of a corporate business culture in the remote areas of rural Bangladesh. This way

microcredit programs have been successful commercial enterprise by developing different

strategies for entrenching themselves in the rural financial market.

7.7. Credit Competition in Rural Market and NGO Strategies

The field experiences and shared opinion of NGO workers indicates that the once-untapped

rural financial market has now become a field of business for microcredit NGOs. This was

done through door-to-door visits in the villages to offer small quantities of credit to poor

women for their social and economic development. Nowadays NGOs have been competing

with each other, as several NGOs offering various microcredit programs have been found in

the same village. Therefore, the rural financial market has become very competitive for NGOs,

which requires different business strategies and techniques to entice clients to join their

programs in the rural areas. The president of the World Bank, James D. Wolfensohn (1996,

cited in Brigg, 2001) stated that:

“Microcredit programs have brought vibrancy in the market economy to the poorest

villages and people of the world. This business approach to the alleviation of poverty

has allowed millions of individuals to work their way out of poverty with dignity”

(p.247).

My observation and shared experiences of the clients with regard to their involvement in

microcredit programs present a different image from the picture painted by the president of the

World Bank. I have found in study villages that NGOs are in full competition with one another

for the expansion of their programs, which was once beyond the spectrum of the formal fiscal

market. The main strategy of NGOs working in my study areas is to attract clients and increase

their participation with the aim of maintaining a high loan-recovery rate and accumulate

capital.

I asked NGO workers: how do they compete when several NGOs (such as Grameen Bank,

BRAC, ASA, and FIVD, B) come to operate microcredit programs in the same village. They

told me that sometimes they have to alter their policies in order to convince clients who have

borrowed from other NGOs to “defect”. One of the most easy and flexible policies of BRAC

remains in the loan collection processes. In some exceptional cases, BRAC collects

installments from clients on a monthly (instead of weekly) basis, although given that this a

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rather recent introduction the clients only consider this a temporary relief from their problems.

Likewise, Grameen recently reduced the number of installments from 46 to 45 to appease

clients who have struggled with repayments. In order to sustain their position in the credit

market, one of the most innovative policies of Grameen is the extension of the repayment

schedule – this is done by offering soft loans to ensure that the last installment can be recovered

from those who have failed to reimburse the money within the given one-year time schedule.

Grameen’s new policy seeks to offer different types of loan with greater flexibility to a wider

range of clients from various income strata. Moreover, both Grameen Bank and BRAC have

been competing to offer credit to poor women by increasing the amount of loans according to

the income and economic status of the clients. One of the most lucrative strategies recently

developed by BRAC is called ‘Reducing Method’, which was not yet in practice when I

conducted my data collection. I only came to learn about the recently introduced system after

corresponding with some of my respondents for the second time. BRAC started to apply this

method from January of 2016 to attract clients. In my own terms, I refer to this as the

‘Consoling Method’ to satisfy clients with nominal services. Here the ‘Reducing Method’ can

be defined as a process through which the rate of interest gradually tends to decrease

proportionally with the diminutions of the principal amount of loan. This new policy of BRAC

has not been fully operational because of technical reasons; thus far only 25% of the clients

have been brought under this scheme.

Regarding the loan-delivery policy, BRAC field officers informed me that they consider the

needs and abilities of the clients with regards to repayment from a market point of view.

According to them, many NGOs are now in operation and poor people have many options to

borrow credit. As reported by BRAC field workers, while NGOs are very much rigid in their

rules to ensure the timely recovery of loans, they are increasingly showing some flexibility in

other aspects as well. Since clients have shared that one of the main reasons for defaulting is

due to their difficulty repaying the loans on a weekly basis, BRAC has experimented with

operating monthly repayments by taking four installments together in a bid to retain their

clients. This is still not yet a pervasive practice of the program. Indeed, field workers from both

BRAC and Grameen Bank have opined that microcredit projects are primarily a business

venture, and that the guiding policy and philosophy underlying the market economy is to

expand its program portfolio by increasing the number of clients. In this manner, NGOs have

thus been able to remain commercially viable despite intense competition through seeking

maximum profit from micro-investments.

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The provision of micro-capital to improve economic growth and alleviate poverty represents a

microcosm of the dominant economistic-developmental approach, and resonate with aspects

of modernization theory. Efforts to integrate subjects into the developmental project of

microcredit signals the operation of related processes of subjectification and discipline. Thus

the focus on income generation, self-employment and the encouragement of developmental

subjectivities synchronizes with the microcredit approach (Brigg, 2001). Microcredit has

become a fashionable mode of development for promoting entrepreneurship amongst the poor,

where poor people become the ‘managers of their own enterprise’. Through the operation of

credit in rural market, NGOs have been able to become a profitable business enterprise as well

as expanding its operation in even the remotest villages traditionally excluded from the formal

financial market. I talked to NGO staff working with poor clients at field level in order to

understand the difference between NGO-operated microcredit and conventional bank credit in

terms of their interest rate and financial transactions. They have stated that NGOs have been

providing ‘home-loan services’ to the poor without collateral, while the conventional banking

system does not allow poor people access to loans. Prior to NGO service-deliveries, the rural

poor therefore had no access to capital or credit, which has contributed to their successes in the

villages. Rankin (2001) argues that poor women’s participation in microcredit developmental-

intervention programs is considered the most viable strategy to enhance the financial

sustainability of their programs, which ultimately contributes to the broader goals of expanding

financial markets to areas that fall beyond the purview of conventional capitalist-commercial

markets. This way rural areas have become a flourishing theatre for NGOs to achieve the oft

pronounced development goals of poverty alleviation and the empowerment of poor people,

thereby promoting the neoliberal agendas of fashioning and deepening self-regulating markets

at the village levels (Kalpana, 2015) in Bangladesh.

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CHAPTER 8

Agency, Empowerment and Intra-Household Relations: Expanded

or Exacerbated?

The empowerment of women has been incorporated into the parlance of development as a

crucial issue given women’s disadvantaged and vulnerable social position vis-à-vis men in

much of the developing world. Therefore, the discussion on gender and development has come

to focus on the empowerment of women, and has become central to the developmental

discourse (Parmar, 2011, see Sen, 1999). Moreover, social and economic inequalities further

compound their lack of support for fundamental functions of a human life (Nussbaum, 2000).

Besides, “development policies and programs tend not to view women as an integral to

economic development process” (Mehra, 1997:136). As a result, over the past two decades

development policies have become increasingly people-centric, given how NGOs have

demonstrated an interest in improving the economic wellbeing and empowerment of the poor

– particularly poor women (Mehra, 1997). Therefore, development policies and frameworks

have been designed to integrate women in social and economic development activities so that

they can lift themselves out of poverty and thereby empower themselves.

In the context of Bangladeshi women, empowerment has been one of the declared goals of

national development, and microcredit/microfinance is playing a leading role in order to

achieve this goal (Ali and Hatta, 2012). In the development intervention programs of NGOs,

microcredit has been a popular tool to incorporate women into the field of economic activities

and market transactions, although it remains controversial whether and (if so) how microcredit

has contributed to the empowerment of women and the promotion of gender-equality in the

family. Therefore, the main objective of this chapter is to explain how women construct their

views about empowerment and the formation of agency with regard to their actual position in

the household and in the broader community. Besides, this section is devoted to analyzing

whether microcredit has reduced the level of asymmetric gender relations and improved

women’s fallback position and status in the family. Moreover, attention has also been drawn

to ascertain if women can develop greater freedoms of choice and autonomy, and how they

negotiate traditional norms and values in order to cope with such interventions, and whether

microcredit has brought stability in the family of the poor women through their involvement in

income generation activities and their economic contributions to the family welfare.

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8.1. Agency, Empowerment, and Perception of Women

Women and men differ in their ability to make effective choices in a range of spheres across

all countries, with women typically at a disadvantage (World Bank, 2012). The differences in

outcomes emerge because women and men have unequal opportunities to exercise agency

(World Bank, 2012). As a result, the concepts of agency and empowerment have drawn huge

attention in the developmental literature and policies aimed at poverty reduction (Samman &

Santos, 2009). The concept of empowerment is connected to terms such as “agency, autonomy,

self-direction, self-determination, liberation, participation, mobilization, and self-confidence”

(Ibrahim & Alkire, 2007:6, see Narayan, 2005). The fundamental idea of empowerment lies in

the notion of power, which refers to the ability to make choices (Kabeer, 1999; Kabeer, 2005).

Empowerment therefore refers to a person who was previously denied the freedom to make

choices to acquire such an ability (Kabeer, 1999). Empowerment can broadly be defined as

“the expansion of freedoms of choice and action to shape one’s life. It implies control over

resources and decisions” (Narayan, 2005: 4). It underscores the fact that individual agents are

already situated in social contexts that determine how much control they actually have over

their own lives (Koggel, 2007).

The agency of an individual develops within the structure of a particular social context.

Empowerment takes place within a specific social and cultural environment. Agency as another

dimension of power refers to people’s capacity to delineate their own life choices and to pursue

their own goals even in the face of opposition (Kabeer, 1999). Agency refers “not to the

intentions people have in doing things but to their capability of doing those things in the first

place” (Giddens, 1984:9). For Sen (1985) agency is “what a person is free to do and achieve in

pursuit of whatever goals and values he or she regards as important” (p. 203). Agency in this

regard does not only mean the opening of a wider range of opportunities through which people

can make choices. Rather it is a process of having the effect of power to remove barriers; the

ability to make use of the opportunities, and to be free to participate in economic, social and

political institutions (Koggel, 2007). Therefore, agency enables an individual to develop the

capacity to bargain, negotiate, and resist in different spheres of interactions. Likewise,

empowerment is the capacity of women to increase their self-reliance, their right to determine

choices, and their ability to influence change by achieving control over material and non-

material resources (Moser, 1989). Thus agency is exercised by utilizing resources (such as

credit) as a medium (Kabeer, 2005). Giddens (1986) identified resources as a medium through

which power is exercised. Liberal feminists hold that the empowerment of women expands the

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options of women beyond the domestic and into the public domain (Rowland-Serdar &

Schwartz Shea, 1991). Women’s empowerment, therefore, can be defined as “the capacity of

women to be economically self-sufficient and self-reliant with control over decisions affecting

their life options and freedom from violence” (Rao and Kelleher, 1995, in Banu et al., 2001:

30). Many argue that empowerment requires economic resources to improve people’s

opportunities and gain better income. Microcredit, for example, has the role in empowering the

poor, particularly women (Mayoux, 2000; Malhotra et. al, 2002). Women’s agency in this

situation is very much important for freeing them from the social constraints of patriarchy,

poverty, ignorance and lack of mobility (Aslanbeigui, et al., 2010).

Poor women are seen as disadvantaged and discriminatory subjects of societies in the ‘Global

South’ and, therefore, are primarily targeted as the developmental agents of their family and

community (Lüddemann, 2016). Power is understood as a kind of interface between agency

and structure, and empowerment is a process that requires a shift in both dimensions (Pettit,

2012). Therefore, power can influence both agency and structure in the form of power over

(the ability to act something), power with (collective understanding and action) and power

within (dignity and self-esteem) (Rowlands, 1997). According to Foucault, power refers to the

rule of individuals over other individuals, and thus these are social relations in which “certain

actions may structure the field of other possible actions” (Foucault, 1982:791). Power relations

are not separated from social relations; rather they are the conditions of possibility in the society

as such (Lüddemann, 2016). The relation of power becomes discernible in the implementations

of new programs and practices such as microcredit programs, where the subjectivization of the

borrowers and clients is crucial for the operationalization of the discourses of development

(Lüddemann, 2016). From another dimension, the concept of governmentality refers to the

range of knowledge and techniques directed at managing the self through the regulation of

everyday conduct (Foucault, 1991). The concept of governmentality allows us to examine “the

constitution of new political forms and levels of the state such as the introduction of systems

of negotiation, mechanisms of self-organization, and empowerment strategies” (Lemke,

2003:10). Kothari (1986) has argued that empowerment advances through a decentralized self-

government. Therefore, the empowering instrument of power demonstrates the ways

“individuals and social groups are governed by freedom and choice” (Lemke, 2013:37). Since

the neoliberal ideologies of individualism have been successfully combined with

empowerment strategies (Woehl, 2007) and is frequently equated with getting women into

market (Bergeron, 2003), how NGO interventions of microcredit have contributed to achieving

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their stated goals is a point that needs to be investigated. Therefore, this chapter analyses how

rational profit-oriented microcredit programs have contributed to empowerment and the

development of agency amongst poor women by incorporating them as individuals into

income-generating projects as an ‘entrepreneur of the self’.

There are academic and policy debates about whether microcredit can effectively serve as a

viable developmental intervention tool to overcome gender inequalities. Moreover, it is also

claimed that microcredit has challenged the world of gender inequality by extending loans to

poor women in a formal way that was once impossible. Given how it was initially proven that

women were not only good borrowers but also good repayers of loans (Yunus, 2003). Many

authors have used this premise to conclude that the participation of women in microcredit

programs has encouraged them to participate in the public domain, reduced their exposure to

violence, sharpened their decision-making capacities, engendered self-esteem and courage, and

improved opportunities to exercise agency in household interactions (Hashemi et al., 1996;

Kabeer, 2001; Pitt et al., 2006; Mahmud, 2003).

NGOs like Grameen Bank and BRAC profess the common objective to empower poor women

by spurring employment generation through microcredit programs to overcome their limited

access to credit and situate them within the mainstream of development. Therefore, the

integration of women in gainful economic activities has been the main thrust of microcredit

programs. Importantly, alleviating the poverty of their clients’ remains the core objective, while

empowerment is assumed to be an indirect outcome of such programs.

I wanted to know the client women’s perceptions about empowerment and how they construct

their views with regards to such issues. My respondents felt that money was one form of

empowering women. According to one of my respondents of Grameen Bank, “Money is the

root of everything. Everything is possible if there is money”. Another respondent of BRAC has

said, “Power lies with those who can spend money and thus can be empowered.” I also asked

my respondents about who spends money for maintaining the household. Many respondent

women said that they do not have control over money because of their inability to contribute

financially to the family. A client of Grameen Bank named Lalbibi said, “My husband earns

money and he maintains everything in the family. I have to depend on him because I do not

earn money and cannot use it the way my husband can.” A vast majority of poor women are

found to have been dependent on their husbands for economic and other related support. Their

control over expenditure is apparently limited or nonexistent given the fact that they could not

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directly contribute to the economic wellbeing of the family, despite being key service providers

at the household levels. Only in a small number of cases I have found women who have no

able-bodied person in the family maintaining control over household expenditures. Indeed, it

appears as though their male counterparts have set an invisible demarcation, which restricts

their ability to engage in economic transactions. As a result, their access to the market domain

in terms of economic transactions is blocked, hindering the development of their social and

economic agency.

It has also been found that women’s equal access to the labor market and relevant economic or

employment activities have virtually been gridlocked due to societal norms and values, which

discourage women from entering into any kind of business that fall within the traditional

purview of the “male domain”. Consequently, women’s world of work is limited to the

boundary of the homestead, thereby transforming them into passive and submissive objects.

For example, income-generating projects driven by microcredit ended up being completely

managed by the husbands, leaving women with little control over how the borrowed credit has

been utilized. Poor women in this case are unable to contribute directly to the household income

like that of their male counterparts by way of engaging themselves in economically productive

activities. Therefore, their social and economic agency has not been developed to their full

potential, which might lead to their empowerment. Most women were not involved in the

income-generating activities of the households, but were simply the technical conduit for

undertaking loans, which did contribute to the development of their agency. The rigid

traditional norms and values practiced in rural Bangladeshi society, including patriarchal

attitudes towards females, and the lack of employment on the part of women are some of the

negative factors that inhibit the development of women’s social and economic agency. This is

something that microcredit programs could not address properly due to the lack of educational

programs that might catalyze ideational changes between the male and female populations in

rural society. This is important, since financial autonomy is considered one of the prerequisites

for the emancipation of women in society. However, microcredit programs have mainly

focused on the timely recovery of loans, thereby making clients even more dependent on their

husbands and subject to NGOs discipline instead of creating an even path for their

empowerment through self-employment programs. Consequently, women have not been able

to develop their inner potential, which could effectively be utilized in order to increase their

status in the family and society, and therefore, contribute to the improvement of intra-

household gender relations.

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Since power accrues to those who generate their own income and control overt it through direct

contributions to family welfare. Therefore, women having no direct economic contributions to

family appear to lack the decision making power in family affairs, which could be enhanced

through their contributions to household welfare like that of their male counterparts. Amartya

Sen (1990) also maintains that women can participate in the familial decision-making and thus

improve their status remarkably if they are able to contribute to family income. It has also been

observed that male members of the family primarily do the purchasing of household needs.

There are certain specific spheres where women can enact their choices in buying household

items, but they typically hinge on their husband’s decision. Purchases are of two kinds – small

purchases and big purchases. Small purchases include buying food items for immediate need

such as rice, lentil, and other groceries from the nearby shops, and cooking utensils, bungle,

earrings, cosmetic and junk ornaments from hawkers who sell their products by visiting from

door to door. Big purchases include buying important household items such as furniture, cows,

goats, house construction materials, rickshaw, automobiles, and so on. Men usually make the

final decision regarding big purchases.

A significant number of women belonging to various income groups have argued that both

husband and wife should make decisions over family matters jointly for the betterment of the

family. Kabeer’s (2001) study at a remote village in Bangladesh also found that women prefer

joint decision-making rather than taking decision by husband or wife alone. In my study areas,

it has been found that most of the women also consider joint decisions to be conducive and

constructive for the collective wellbeing of family and children. I asked my respondents

whether they felt undervalued if their husbands make decisions alone or when they do not give

priority to their opinions, and which way is good for taking the decision regarding the family

issues. When husbands make decisions alone they feel inferior, and therefore lose self-esteem

and courage to exercise their agency and management of the family. I spoke to one of my

respondents whose husband was confined to the bed due to chronic illness. She has been

supporting the family in her own capacity because she has no alternative means of help. She

complained:

“I am all in all in my family. I maintain my family single-handedly. My husband is

sick. That is why, my husband is dead despite being alive. So I have no other choices

but to support the family by myself since I have no children who can shoulder the

responsibilities of the family. When my husband was in good health, he would do

everything. Now I am the head of my family. I run the family by myself.”

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This is the real-world experience of the poor credit-borrowing women in rural Bangladesh.

Poor women have virtually no choices regarding the practical needs of their lives mainly

because of their dependency on husbands or other adult males in the family. Only in some

exceptional cases are they are bound by circumstance to assume the position of the head of the

household58 due to the absence or illness of their husbands. When women lose their husbands

they naturally become dependent on other male members in the family like sons, but there is

nonetheless no way of escaping the socially accepted barriers of belongingness to other male

persons. I also asked my respondents as a supplementary question about who should make

decisions about family affairs. Approximately 47% of them said that husbands or male persons

in the family should take decision regarding the familial issues. One of the respondents of

BRAC in Kazirgaon village named Khatun aged about 50 has put her opinion in the following

way:

“We can make household decisions together with all family members, but it is better if

the decision is taken by men in the family like my husband and adult sons since they

go to different places and are more informed. They have access to different places and

mix with variety of people. They have good knowledge of the outer world. For this

reason, they are better decision-makers. If women want to be like men, they have to be

given work. If women can earn money like men, they will be of value in society, like

men.”

The statement points out that a considerable number of women prefer their husbands and sons

to make decisions regarding vital issues of the family. Microcredit has not helped alter poor

women’s own self-perceptions and belief in their abilities to make important decisions that

could reshape their attitude, which is part and parcel for their empowerment and changing

status in the family and in broader society. I also asked my respondents which kind of situations

should men make decisions. One of the respondents named Achia of Grameen said, “I don’t

agree with the view that men should make the decisions, because men don’t know the system

of running the family. It is women’s work!” Against her answer I again asked her what sort of

situations women should make decisions concerning the family affairs? She puts her opinion

in a rather sarcastic way:

“I think women are obliged to make decisions in three spheres. Say, doing job: if her

husband is unemployed, then women will take up job if they are educated and run the

58 Some households are headed by widows following their husband’s death, or when they have no other adult

person in the family. In this case women have to run the family in their own capacity.

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family. If her husband lives abroad, then women will be forced by the situation to run

the family. If her husband is a drug addict, he will not be able to think of the family. In

that case too women will maintain everything.”

This is just the typical expression of female credit-clients with regard to the issue of

empowerment. Although some women prefer to make decisions jointly with their husband’s

for the overall wellbeing of the family, the rural culture and society of Bangladesh does not

allow women to make any decisions for the family, unlike their male counterparts. Women

make decisions on issues related to cooking, along with the routine household chores. What

kind of curry is cooked for serving the family is typically the woman’s decision, not the men’s.

I also asked my respondents about whether they participated in any electoral processes or

casted votes during the local council and national elections. Almost all of the respondents said

that they voted for the person who their husbands or male relatives recommended to them.

Before the election, husbands and fathers-in-law ask all other members in the family to vote

for the person they picked. One of the respondents named Khatun of BRAC again has said:

“I cast my vote to whom my elder brother-in-law ask me to do. This vote does

not favor women because it is an election for the men. We are just casting vote

to appease our men. We have no personal choice in this regard.”

Loan-borrowing women have given their opinions on their lack of autonomy when casting

votes, which influences their political behavior. Moreover, I wanted to know whether poor

women participate in any arbitrary meetings held in the community when some intra-

community feud occurs. Joining any local issue to be solved is a significant indicator that

determines, to some extent, women’s political status in the society. Women in the context of

my study areas reported that they have not participated in any arbitration meetings with the

community to resolve disputes, primarily because of the gender-biased attitudes59 of the society.

Therefore, women’s political agency is underdeveloped due to the societal attitude of males,

even though the government and NGO rhetoric indicates that the political empowerment of

women is on their agenda. Men in the family regard women as subordinate entities, which

thereby suppresses their social and political aspirations and hinders their ability to exercise their

agency in the social, economic and political arenas. Women’s political agency is one of the

59 Men in rural society consider that women should not be allowed to cast votes according to their own preferences.

Wives in this regard listen to what their husbands or other male elders in the family ask them to do. Underlying

reasons behind the fact is that societal attitude towards women are not neutral and even women’s ability and work

is not properly recognized.

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most important factors that will determine their ability to change their existing subordinate

position in both the family and the broader society. From the opinions of the respondents, it can

be argued that power lies with those who controls and disposes of money, and that the

empowerment of women is ultimately a process that emerges from control over both material

and non-material resources and their proper uses by women who are the subjects of this process.

8.2. Developing Women’s Freedom and Autonomy?

One of the most important dimensions and indicators of empowerment is the liberty and

autonomy of women exercised in different spheres through the actions and interactions, which

enables them to have developed their agency for the alteration of their lives. Bangladeshi

society and culture has given men and women different outlooks towards life that stimulate

them to determine their life choices as per their own knowledge and understanding. Thus, male

attitudes towards females has negatively contributed to the sharp distinctions between male

and female in terms of a value judgment, which justifies their stanch position with regard to

the issue of their lives. I have found in the study areas that women cannot make decisions for

the family and cannot do anything without first consulting with their husbands, implying that

women’s decisions in family affairs are not recognized or valued. In this regard an argument

of Westergaard (1983, cited in Naz, 2006) can be presented here, where “there is lack of

decision making power and control on the part of the women over the economic life of a rural

family because it is men who control the means of production” (p.83).

One day I had an interview with a client of Grameen Bank named Pairun (age 36). Her husband

was sitting beside her. He wanted to share his opinion with me concerning who should make

the decisions in the household. In his view, “women should not have the right to take decision.

Women have no practical knowledge; they do not know the social reality that they [men] face

and try to tackle. Have you ever seen any woman who can do her job nicely?” Such perceptions

of women by men in rural Bangladeshi society are common. Women themselves have also not

developed their own ideas about freedom and autonomy due to the cultural constructs and

practices that contribute to gender stereotypes amongst women themselves. If autonomy is

identified with individual independence, the self-determination of individual women, and the

right to individual choice (Mies, 2014), there appears to be a lack of these components in the

rural context of the study areas. Some of the women also do not desire freedom, for their

mindset has been culturally constructed and developed in such a way that they cannot choose

to be as free as their male counterparts. I present the views of a respondents under BRAC

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named Nazma (aged around 35), who said, “Women who think of god and society do not have

freedom.” In her opinion women should not have freedom like men. If women are given

freedom, the relationship between husband and wife will be spoiled. I probed further: why do

you think that freedom will lead to friction between husband and wife? She replied:

“Women should be under the control and custody of men like her father or husband.

Otherwise there is the likelihood of women being spoiled. The time is very bad. Society

is ruined. There are no good people in society nowadays. Who saves who?”

This is the attitude of women with regard to freedom in their lives. Freedom and autonomy in

any social, economic and political realm is a relative matter because of the variation of the

perspectives from person to person. Women’s views with regard to their own freedom is

important and has to be taken into account for presenting the issue from the point of view of

the women, who actually consider what is really essential for their lives. According to the given

statement, it can be argued that women mostly do not want their own freedom as the culture

has cultivated a mindset and shaped their beliefs and behavior that they do not challenge. The

rural social structure has taught them to be loyal to their husbands or other male persons in the

family. The cultural constructions of society has a strong effect on the beliefs, actions and

values of rural women, which is something that microcredit program could not break. I asked

my respondents about whether they enjoy more freedom after joining the credit programs, and

how they could exercise their freedom and autonomy in different aspects of their lives. Hena

Begum (age 40) of Grameen Bank has said in response to my question as follows:

“Credit has killed my freedom. It did not help increase my freedom of movement in

society. Now I have to bow down my head. My husband always remains in a pensive

mood because of this. Sometimes my husband does not give me money for

installments. I have to stay indoors for shame due to society and cannot go out. Credit

[kisti] is a serious curse. It has to be paid even by selling blood. They [NGO workers]

give legal threats to induce repayment. We pay the installment in time due to fear of

police and social intimidation.”

A remarkable number of loan borrowing women have experienced limits to their movements

due to their financial constraints. Only an insignificant number of women who have regular

income and repayment capacity do not feel shy being in front of other people in the community,

unlike those who cannot repay the loan in time. I have also found that the majority of poor

women belonging to middle and lower income group face acute problems related to repayment.

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As a result, they try to avoid being in touch with other people because of their inability to repay

their loans, which has pushed them to the periphery of society. Normally, the culture and

traditions of rural society do not allow women to move freely in society as and how they please.

After joining the microcredit programs the scope of their mobility in the neighborhood has

increased to a certain level, such as visiting the local loan center with other women. Local

center is in center chief’s house situated in the neighborhood, which is not far beyond the area

of their localities. Moreover, in the local center all of the visitors are women except the local

field managers. Women’s mixing with other women in the same community does not add

significant value to the changing pattern of their cultural attitude and behavior giving them the

sense of appearing in public without shame and hesitation. However, the crux of the problem

in this connection remains in the perception of women who do not consider their mobility in

public places as a good thing. One of my respondents of Grameen named Achia (30) has said

with regard to her mobility in male domain as follows:

“I did not get out of my home before taking loan. Nobody knew me. Now people know

me as a bad person because I took a loan. People think that I am a needy person on

account of my loan borrowing. People underestimate poor and needy persons.”

It is proven that microcredit has the potential force to bring women out of the boundary of the

homestead through the obligatory physical appearance at the local loan center, and therefore,

has increased their mobility in the society through the networks and organization. But it could

not change the views women hold about the expansion of their own individual freedom and

autonomy in the realm of social interactions and other significant arenas influencing their life

choices. Women are forced to show up at the loan center in order to repay the loan-installments,

but no educational and consciousness-raising issues that could have brought ideational changes

among them are discussed in the center. Consequently, poor women appear to have not been

able to develop their agency and autonomy in the realm of family and even in society due to

the lack of proper knowledge and consciousness.

NGOs in the context of the study area are found to have focused on the financial sustainability

of the programs instead of directing their attention to creating awareness and building a base

of social education among the poor women. Rather they have controlled the financial behavior

of the clients through the imposition of stiff organizational rules upon them. Microcredit

programs have been successful in terms of repayment based on gendered social norms and

traditional social relations, but the major objective of the programs have unfortunately been

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overlooked to a large extent. Consequently, women have become disciplined and docile social

subjects through the regular repayments of loans by complying with the rigid rules of NGOs

instead of being able to enhance their agency and autonomy in the family and society by

improving their range of economic options. Fernando (2006) observes that the microcredit

programs targeting poor women as clients not only code “emancipation” in economic terms

but also “influence the way people construct themselves, their conduct and their relations as

free individuals”(p.5). Some studies (Kabeer, 1998; Mahmud, 2003) have explained that

microcredit has bought women into the public forum and has widened the horizon of movement

beyond the family precinct. My study differs from them on the grounds that women’s moving

out does not necessarily signify their empowerment. Empowerment in this regard is how

women construct their views on issues of the way they exercise and enjoy freedom and

autonomy in different stages of their life cycle.

8.3. Loan Collection and Use: Who Bears the Risk and Responsibility?

It is widely recognized that microcredit programs target poor women as their clients on the

premise that they are one of the most disadvantaged sections of society, and therefore need to

be incorporated into economic activities for sustainable social development. It is obvious that

poor women’s integration into development is the basic building block for the equitable social

development of a developing country like Bangladesh. From that point of view NGO-promoted

microcredit programs have successfully utilized that scope in order to promote and harmonize

the development of the society. However, practical experience suggests that since loans are

used and controlled by men instead of women, who are supposed to be the targeted

beneficiaries of the programs.

60The pie chart shows that despite poor rural

women being the intended beneficiaries of the

programs, husbands’ use 85% of the loans, 7%

of loans are used by sons of the client-women,

and only 8% of loans are actually used by the

clients themselves. The statistics indicate that

a majority of women are not in the control of

the loan and how it is used.

60 Source: Adapted from field interview data.

8%

85%

7%

Loan use receieved by women

Wife Husband Son

Figure 7: Loan use received by women

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My field experiences reveal that at the time of collecting loan from NGOs women take with

them their husbands or other male persons of the family who act as the guarantors of loan.

NGOs usually do not offer loan to poor women who are not accompanied by a male person or

relative. This is the most practiced and observed rule in microcredit NGOs like Grameen Bank

and BRAC. Besides, women have to submit two photos of their husband, along with his

signature or thumbprint on the documents before a loan may be undertaken. In this context,

women are the main agents to whom the loan is proffered, while men act as guarantors of the

provided service. In this way women have become an appropriate channel for NGOs to provide

loans, since they simultaneously function as facilitators and beneficiaries. Given that women

have to open a book with two photos of husband and wife are pasted, which indicates that

microcredit programs do not consider women as the most significant agents to target because

of their positional vulnerability and (lack of) employment status. As women are not the

traditional breadwinners they are not considered ideal agents for providing loans.

Women do not end up using the loans to stimulate self-employment or income-generating

activities because of the sexual division of labor that segregates between male and female work.

In the context of rural Bangladesh women cannot undertake many kinds of activities (Kabeer,

2001). As a result, they are simply the collectors of loans and bearers of responsibility. In the

majority of cases husbands use the loan money on their own accord, while women take full

responsibility for paying it back. While microcredit programs purport to empower the poor

women by offering them earning opportunities to raise their status in the family and in broader

community, the loan delivery and management system in reality has been nurturing the

patriarchal social norms and values instead of breaking or challenging the very system.

Therefore, microcredit programs have been unable to break the long-practiced patriarchal

social structure; and rather have fostered it through the loan delivery mechanism, Most of the

authors (Hashemi et al., 1996; Kabeer, 1998), who have depicted the positive image of

microcredit on women’s empowerment also concede that microcredit alone cannot overcome

the deep-rooted patriarchal social structure.

My observation notes reflect how poor women face critical situations on the day of repayment.

One day I was sitting in a tin-shed house where a group of women were moving about. The

center-chief of BRAC microcredit programs in Kazirgaon village was about to go mad. All

kinds of negotiations were ongoing with the center chief. The son of one Tahir Ali was sick

and due to that reason his wife could not pay the installment that day. The center chief was still

running around trying to convince other women to make repayments. One client lady named

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Lal Bibi went into the house of my local guide Gause to negotiate with the center-chief. I

wanted to talk to that lady but she declined, giving me the impression that she had lost

everything. This is the reality of poor women who borrowed loans from BRAC. In the entire

village and in the four centers of Grameen bank and BRAC I have not found any single male

person of the family who appeared in the centers to repay the loan. Men are not the risk bearers,

putting them on the safe side. Women on the other hand bear the responsibility of repayment,

making them more vulnerable compared to men. I asked my respondents about who uses the

loans and why. One of the clients of Grameen Bank named Tania said as follows:

“I borrow loans but my husband uses it. I cannot use the loan because my

husband is the head of our family. I have no work unlike my husband, and

therefore have no money. I have to depend on my husband for the installments.

My husband gives me money and I give the money to the NGO. My

responsibility is to pay back money at the right time. This is not the responsibility

of my husband. He remains care free.”

Microcredit has put additional risks on the poor clients instead of empowerment in the

transformative sense. Empowerment of women by way of creating employment has been mere

programs rhetoric for the fact that microcredit programs have been distracted from the main

objectives, which is stated as the social and economic development of poor women. Both

Grameen Bank and BRAC have paid full attention to the recovery of loans from poor female

clients, thereby digressing from its empowerment philosophy in which process women have

become their technical choices for the convenience of the programs. What empowerment

signifies depends on the actual status of women in the family and in the broader community.

The family is the smallest unit of society, and therefore women’s representation in the family

reflects their social position. A majority of the poor women have simply borrowed loans from

NGOs and given it to their husbands or other eligible members of the households like their

adult sons. Borrowing money is the responsibility of women, while repayment responsibility

lies with the husbands so long as women do not have income. Simply borrowing money to

channel to their husbands’ cannot significantly empower women, unless the money is utilized

according to the wishes and choices of the wife. Money [credit] is a means of production and

women should have control over it. Women in the rural family would not be able to change

their lives unless they have more equal control over the means of production.

In addition, about 37% of respondent women said that they suggested using the loan money for

income-earning activities such as raising poultry, but their husbands refused to listen to them

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or share some of the money with their wives. Those client women told me of that they are

expected to defer to their husbands’ judgment. In the context of rural society in Bangladesh a

woman either has to depend on her husband or adult sons who are the primary breadwinners of

the family. Women simply play the role of a wife or a mother. Therefore, women have to

depend on their husbands for all material and nonmaterial supports.

61The pie chart demonstrates that 69% of

women borrowed loans after being asked

by their husbands, while 9% of them

borrowed after being asked by their sons.

Only 8% of women borrowed loans on

their own accord, while 7% of women were

encouraged to borrow loans by their

relatives and neighbors respectively. In a

majority of the cases it has been found that

women did not borrow loans out of their

own free will. In majority of the cases

husbands’ ask their wives’ to take loans from NGOs, even though in some cases they are

unwilling to do so as they know that they will have to bear the full responsibility of repayment.

Most of the women have the same opinion that undertaking loans might be convenient, but

paying back the installments on time is difficult. A remarkable number of the credit clients

reported that they have endured bad words or vile language from the NGO workers when they

fail to make repayments on time. As a result, even though they are often reluctant to take loans,

their husbands force them to do so, which essentially does not benefit women. Traditionally,

rural women in Bangladesh are conditioned to regard the familial interests as being one and

the same with their own interests (Kabeer, 1991). Besides, women are generally the welfare

thinkers and always give priority to the wellbeing of the family and children, which might be

another reason to listen to their husbands regarding the borrowing of loans in addition to

negotiating family conflicts. My argument in this regard is that female empowerment is a

natural process that cannot be achieved through imposing anything against the will of the

women. Poor women are on a double-edged sword. If they do not take loan their husbands may

61 Source: Adapted from field interview data.

Husband

69%

Son

9%

Own

Initative

8%

Relatives

7%

Neighbor

7%

Figure 8: Who asked you to take loans?

185

reproach them; but when they borrow loans they end up shouldering the risk and responsibility,

creating serious burden and stress. Women’s social status can be uplifted only when some of

the economic control remains in their hands.

8.4. Microcredit: Bringing Peace or Increasing Stress?

Microcredit initiatives have received huge recognition worldwide for its pioneer and its

institution with the jointly awarded Nobel peace prize. The philosophy behind awarding the

prize was to establish peace in society through the alleviation of the poverty amongst the rural

poor, and to identify poverty as a severe hindrance to development. Development is considered

to be a prerequisite for establishing peace, which can be achieved through sustainable

development (Sarker et al., 2012). The respondent women have said that while they borrow

loans due to their need, NGOs put pressure on the clients to make repayments, which has

disturbed the peace of women. Approximately 33 respondent women out of 49 have reported

experiencing the negative and corrosive effects of credit on their lives.

A significant number of respondent women complain of suffering various symptoms of

different mental and physical disorders, which have allegedly been a result of repayment stress

and pressure. They have reported that credit is a curse for them because only they gain pain

from borrowing credit. Credit has created mental agony, pain and suffering, trauma and

tribulation for the poor women belonging to the middle and lower income category; whereas

for the high income group only a fraction number of clients (11 women) have reported not

encountering such incidences due to them having regular income coming from different

sources. Consequently, they can pay the installments within the given time frame without too

much difficulty. Women having regular income-earners in the family are thus able to cope with

the terms and conditions of the programs. The situation is far more acute for those having no

productive activities or stable income sources. One of my respondents named Achia Khatun

(age 45) of Grameen Bank has expressed her opinion about the problems she underwent due to

pressure of credit in the following way:

“I did not have mentionable ailments before borrowing the loan. I have detected high

blood pressure after taking credit. Pressure has been high due to tension of credit. I feel

headache in my entire head because of the installments. I even feel excruciating pain

in my head. Sometimes I become light-headed and senseless. Now this problem has

been chronic. I am afraid that I will die because of the tensions of loan.”

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Poor women have experienced these sorts of problems after borrowing credit from NGOs

due to the reasons that making repayment within the short intervals is psychologically

trying for the women. When NGOs come peddling credit at the doorsteps of the poor,

they try to blandish them in the hope of getting them on board the microcredit venture.

In addition, microcredit NGOs are available in the villages, which motivates husbands to

encourage their wives to borrow loans after finding them to be the closest and most

convenient out of the various providers of services. One of my respondents said, “This

credit [kisti] is not a better way for the poor because it causes mental stress and huge

load.” This is what poor women have opined about microcredit and the related repayment

pressures. About 46% of the respondents have reported that when they wake up the

tension of repayment is the first thing on their minds. The tension gradually increases as

the day of repayment approaches. Nearly 40 of my respondents have said that they have

lost their happiness due to tensions over making the installments. 26 out of 49 respondent

women have reported that they have experienced physical problems such as headaches,

dizziness, high blood pressure, sleeplessness, heart palpitations, chest tightness, nausea,

hypertension, anxiety and worry, to name a few. One respondent named Asmatun (age

35) of BRAC expressed her opinion in the following way.

“If I cannot make the repayment, I will lose face in the society. I start thinking three

days before the payment date how I can pay the installment. I cannot eat properly. I

feel giddy, I feel tense. When I cannot manage the installment, I go to my relatives for

money. Tension gradually escalates until I pay the loan. I need to save face first despite

my physical and psychological problems.”

This is the expression and lived experiences of credit borrowing women in my study areas who

have undergone a lot of loan repayment related sufferings. Microcredit programs have been

touted as the most effective tool for poverty alleviation and female empowerment, but the

ground level experiences of the clients in these intervention programs indicate that it has

increased the level of stress among the poor clients rather than increasing their peace of mind

in the family. As a consequence, the recognition of microcredit for establishing peace and

stability in the family through poverty alleviation mostly remains an unattained goal for the

poor women in rural Bangladesh, particularly in my study areas. I recommend that in order to

alleviate the stress of women, it is necessary to practice greater flexibility with regards to the

rules and regulations of repayment.

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8.5. Microcredit: A Means for Conflict Resolution or a Bone of Contention?

It is widely recognized that some socioeconomic conditions have forced rural poor women to

be involved in microcredit programs. Bangladesh is a staunchly patriarchal society with

different cultural attitudes and roles for men and women. The relationships between husband

and wife often face tension due to the fact that both of them nurture divergent mindsets growing

out of sex-differentiated socialization. Besides, patriarchal domination is manifested first

through women’s positions in the family, and later in the society. Typically in Bangladesh it is

women’s marital status that defines their statues within the family (Zaman, 1999a). In this

context, their relationships has to be based on mutual understanding and the capacity for

compromise between them. Under patriarchy, the wife usually ends up sacrificing more.

In the rural society of Bangladesh, male and female relationships take a different shape, with

women being subordinate to their husbands due to their economic dependency upon them.

These cultural practices have been developed due to women’s lack of direct financial

contributions to the family in addition to other factors62. As a result, women’s position and

status in the family has undergone a detrimental transformation, driving women into even more

vulnerable situations. Generally, among the poor community women hold the view that being

under the tutelage of a husband is better than being single in order to avoid the insults and

aspersions of society.

Besides, domestic violence is perhaps the most common element of the set of violence against

women because of its far-reaching implications on their overall relative gender status (Toufique

& Razzaque, 2011). It is the most specific form of the violation of human rights, and a form of

discrimination against women (Khan, 2014). Domestic violence or violence against women are

typically used interchangeably (Thiara and Gill, 2010). Domestic violence is treated as a

gendered crime, most often committed by men against women (Walby and Allen, 2004). It is

often justified as a man’s right to control the behavior of his wife (Schuler et al., 1996) as a

direct consequence of women’s subordinate status in society (Cohen, 2006). Violence against

women is a commonplace phenomenon in the sphere of both rural and urban societies in

Bangladesh across all social and economic groups (Sarker and Yesmin, 2013), and its

increasing prevalence amongst the poorer classes is alarming (Bates et al., 2004). In rural

Bangladesh, it has become an accepted form of “culture”, and is being transmitted from

62 Social practices and the religious beliefs of men and women in society contribute to gendered attitudes, while

the patriarchal social structure allows men to dominate and control women in various spheres of their lives.

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generation to generation to the point of being institutionalized (Khan, 2005, cited in Sarker and

Yesmin, 2013). Thus this phenomenon has become embodied in the doxa (Bourdieu, 1977).

Wife beating – as one form of domestic violence – is often seen to exist in many poor families,

with women as the primary victims. Respondents have recounted violent incidents against

women at the domestic level over different family issues. The main reason underlying such

violence is usually due to financial issues. One of my respondents has told me of the fact that

men have cool head if they have money in hand, but become more hotheaded when finances

are scarce.

It has been found in a remarkable number of cases that men have no regular income and end

up idling their days away due to paucity of work. One of the main reasons for this is—rural

society typically does not allow for regular high-income occupations because of the nature of

employment available. That is why people cannot find regular work; and even if they can find

work, it usually is not sufficient to cover their growing needs. In this situation the lack of money

is typically the cause of their anger, and women become medium through which their

frustrations are vented due to the pressure of being unable to provide for the needs of the family.

A significant number of women have said that permanent employment and stable income can

potentially reduce the level of conflict between husband and wife. They also argue that regular

paid employment for husbands alone cannot ameliorate this problem. Wives also need to be

employed and contribute financially to family like their husbands, which is much more

effective for achieving a balanced relationship between them. I asked my respondents why they

consider this a useful strategy. One of them from Grameen Bank named Tanzina shared her

views:

“Money is the root of power which is very important for doing everything. Lack of

money is the problem like ours. For earning money, we need work. Basically men need

work first. They are not supposed to stay idle at home. If men remain work-shy they

end up finding fault with their wives. That is why they need to do work which is

beneficial for the family and children.”

In this instance, all women irrespective of their income divisions are of the opinion that their

husbands should be engaged in regular and meaningful income-generating activity.

Respondents claim that unemployed husbands tend to lose their temper more easily, which is

ill conducive for harmonious relations within the family. Moreover, nearly 25 of the respondent

women argued that they need work in order to be empowered, which they deem to be important

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for the equipoised relationships between married couples. A respondent of Grameen Bank aged

around 36 who preferred anonymity very candidly said:

“My husband is a lazy person. He goes to work one day and rests for two days. I have

never seen such a lazy person in my entire life. Whenever I ask him to go pull a

rickshaw [leg propelled three wheeler], he does not pay heed to me. Sometimes we do

not have food at home. Children remain unfed. I buy some food items from local

groceries on credit to cook for my children. He has no concern about this and remains

carefree. The problem becomes acute as the day of repayment approaches. It seems that

I have all the problems and he has nothing to do. If I say something, he picks a quarrel

and beats me. My life has vanished because of this person.”

This is the scenario of rural Bangladeshi poor women, particularly in my study regions. Poor

women in this social and cultural backdrop have joined microcredit programs in order to be

self-employed and earn money to contribute to their families. My practical observations and

experiences of the credit-client women presents a different picture. Nearly 43 out of 49

respondents have said that after their involvement in microcredit programs, the primary locus

of family conflicts centers around credit and repayment. The underlying reason for this is that

women are the ones who repay the loans, while their husbands are the ones who generate the

money for repayment. However, since men do not go to the center for paying the installments,

women as the direct borrowers are the ones who sustain the insults by the microcredit workers.

Women therefore also have to bear the added responsibility of maintaining regular repayment,

which results in them pressurizing their husbands to generate the money needed for the loan-

installments. When husbands cannot collect enough money for the installments, there begins

the conflict between them, with many cases ending up in physical violence. This occurs in spite

of the fact that women try their best to avoid direct conflict with husbands, given the fact

husbands are typically the sole breadwinners in the family.

I can cite here a case of a husband rowing with his wife owing to repayment pressures. One day

I was in one of my respondents’ house named Gulecha, a credit-client of Grameen Bank in

Chatal village. Her husband could not manage money for making loan-repayments on the

scheduled collection day. By this time the center-chief lady named Rachana came to remind her

to proceed to the center with the installment as time was running out. Gulecha was very angry

with her husband, and they eventually ended up quarrelling. Her husband was equally outraged.

He was about to beat his wife, but considering my presence there he stopped short from hitting

her. From the lived experiences of the female clients it is learnt that spousal violence has become

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regular incidence in the study villages. Aminur Rahman (1999) in his anthropological study on

Grameen Bank in the village of Tangail in Bangladesh also found that microcredit escalates

gender violence instead of reducing its occurrence, and adds repayment-pressures onto the

shoulders of poor women. It has been found in the study areas that after joining microcredit

programs, conflict in the relationships between husband and wife has been exacerbated due to

repayment related pressures. Goetz and Gupta (1996) also found that in most of the cases

tensions increased within the household when women put pressure on their husbands for the

money to repay installments, resulting in family violence. Issues of conflict and violence occur

when husbands cannot manage money and are out of work. There is a general correlation

between the level of income and the level of family conflicts. If husbands have stable work and

regular income, conflicts are less likely. I wanted to know why husbands fall out with their

wives, and their strategies to tackle them. Shimul, a credit-client of Grameen Bank, shared with

me the following:

“We did not have contentions and quarrels between us before. Now there are quarrels

between husband and wife due to credit. One day I had no money before the day of

repayment. The amount of money was spent doing shopping. I told my husband I am a

new member, and the day of repayment is tomorrow. If I cannot pay the installment,

other members will call me a bad woman. After hearing this, my husband beat me a

lot. He never raised his hand on me before this. He did this because of credit. Credit

has disturbed the peace of my family. If I cannot make the repayments on time, the

conflict between husband and wife continues incessantly. The relationship between

husband and wife has turned bad. I have to sustain the beatings of my husband. Once

my husband told me to go to my father’s home. He told me to fetch money from my

parent’s home. But I did not do so. We squabbled with one another. Then I went to my

father’s home and lived there for a year. After one year, my mother-in-law took me

back from my father’s home. I came back because I had no other place to go.”

This is just another piece of evidence of violence against women centering on the issue of

microcredit. Many women have complained that their husbands have become arrogant towards

them after their wives have joined the microcredit programs. Grameen Bank clients have to

pay their installments on a weekly basis, which has reinforced the frequency of violence.

Microcredit has indirectly contributed to the escalation of violence through the regular-

repayment process. The incorporation of microcredit in rural Bangladesh for the development

of poor women has given birth to a new dimension of the existing issue of gender inequalities

and violence, thereby adding salt to the wound. This means that microcredit has not been able

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to heal the wounds of violence against women, but rather has exacerbated problems by

introducing new networks of financial inclusion for women in the development intervention

programs. Microcredit repayment mechanisms that only provide for a short repayment window

threatens women’s social and economic security, downgrading their status in the arena of the

family as well as in the broader community. From the experiences of the credit-client women,

it can be argued that the economic condition of a poor family leads to family conflicts, and

women’s participation in microcredit programs has intensified asymmetrical gender relations

in the form of physical and psychological violence instead of reducing its frequency of the

incidence. Microcredit programs have involuntarily sparked off new dimensions of conjugal

conflict instead of reducing the level of familial tension. The conflicts between husband and

wife have now become a frequent phenomenon, taking place every week just before or on the

day of repayment. As a result, their relationship in many instances tends to deteriorate

following their involvement in credit programs. From the overall picture it can be deduced that

conflict and violence is more prevalent amongst the middle and lower income groups compared

to the higher income category because the magnitude of repayment pressure is lower among

the latter.

8.6. Secret Savings and Conflict Negotiation

It is widely recognized that poor people cannot save money so long as the provision of daily

needs is their prime concern. Microcredit programs have at least cultivated norms of saving in

this sphere amongst poor women. This is a good practice that benefits poor women. But the

reverse side of this practice exposes the strategic aspect of microcredit programs, which are

intended for the security of loans and smoothness of recovery. When the date of repayment

draws nearer women becomes worried about meeting the payment date. Around 43% of the

respondents told me that NGO staff taught the client-women to create secret funds

unbeknownst to their husbands in order to ensure the timely repayment of loans. This is because

if husbands know their wife has money in her possession they may try to take it away from her,

which would compromise their ability to make timely loan-repayments and leave her at the

mercy of stigmatization by group members or NGO staff. Saving money in a secret fund is

therefore one way for women to reduce the interference of their husbands.

It is learnt from the respondents that poor families typically do not have any cash savings at

hand. Husbands spend most of their time outdoors, while wives live at home doing household

work. This is why they sometimes require small amounts of cash for their day-to-day survival.

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When husbands sense that that their wife has some money in her possession, he may demand

some from her, which can result in further conflicts. Husbands who fail to manage their money

on a particular day often press their wives to borrow money from the NGO savings fund.

Therefore, NGOs suggest that their clients keep a clandestine fund that can be used as

installments in the event that they are unable to raise the required amount by the repayment

date. It is reported that husbands sometimes instruct their wives to withdraw money from the

NGO saving funds. The situation gets aggravated when wives ignore their husband’s directive

to draw money from the savings fund. In this case NGO workers encourage women not to

disclose the savings fund to their husbands to safeguard their own financial security. About

26% of the respondents said that they [NGOs] do it for their own interest to secure the

repayment in time, and women who fail to pay back the loan in time will have the required

amount deducted from their savings deposited in the NGOs.

Traditional values and religious practices in Bangladesh frown upon women who lie to their

husbands as is considered a sinful act. NGOs suggest that women develop a savings fund to be

kept secret from their husbands. Through this savings practices, they create a kind of ‘culture

of lying’ between wives and husbands, which may subsequently stoke conflict. This has added

a new dimension in the sphere of social and family relations. It is neither fair nor ethical for

NGO staff to encourage women to keep confidential savings funds to ensure the timely

repayment of loans. Rather, it should be conducted in a fair and transparent manner in order

not to cause confusion or conflict amongst clients and their families.

8.7. Credit as Dowry and Conflict Negotiation

The concept and practice of the dowry in the context of Bangladesh is not a recent phenomenon.

Rather, it is an ancient form of marriage transaction (Kamruzzaman, 2015) involving a pattern

of marriage payments made for satisfying the demands of the bridegroom during the wedding.

The practice of giving a dowry was to assist a newly married couple to start their lives together

with ease. However, over the course of time this system has turned into a commercial

transaction in which financial considerations receive primacy over the personal merits of the

bride (Singh, 2013). Dowry amongst Muslims in Bangladesh is a recent practice, but it was a

common phenomenon among certain specific high caste Hindus (Amin and Cain, 1995, cited

in Esteve-Volart, 2004). In the past, dowries were given in the form of household goods, but

nowadays such transactions are usually made in cash-payments as gifts (Amin and Cain, 1997).

In Bangladesh, the dowry system has given rise to various socioeconomic problems with dire

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consequences. This customary practice is often seen as a form of gender discrimination against

females (Esteve-Volart, 2004). Despite this, the practice of dowry continues to exist in society,

as it functions as a form of insurance against divorce for Muslim couples (Esteve-Volart, 2004),

and can increase the bargaining power of the bride in the marital household (Zhang and Chan,

1999), and lower the likelihood of divorce (Esteve-Volart, 2003). Dowry related violence

against women is extensively embedded in gender norms (Kamruzzaman, 2015), which has

become a pervasive phenomenon in rural Bangladesh due to socioeconomic status of women,

and particularly amongst poorer community. The practice of dowry provisions have been

actively discouraged by the government and other organizations like NGOs. Women are the

ones who typically suffer and sustain dowry-related violence in the family, which can result in

the break of conjugal relations. In Bangladesh, the form of dowry is now seen as a negative

marriage transaction that is prohibited by the state. Moreover, some designated NGOs have

also played a remarkable role in discouraging people from offering and receiving dowries, in

some cases even providing legal aid to victims. Despite this, the practice remains rife in the

poor communities of Bangladesh.

There is a popular perception that whatever is given cordially as gift for the bridegroom during

marriage is not considered a dowry. However, and on the other hand, the same “cordial gift”

becomes a dowry when it is given against the wishes or (financial) abilities of the bride’s

parents. The problem only occurs when the voluntary transaction is made obligatory as an

essential part of marriage through the coercion of the bride (Chowdhury, 2010, cited in Begum,

2014). In poorer communities, most of the women become victims of dowry related violence

because of their inability to make marriage payments to the bridegroom and his family.

Patriarchal social values are intertwined with poverty, lack of education and ignorance, which

thereby perpetuates women’s subordination over the decades (Begum, 2012). Consequently,

women have fallen victim to such traditional social and economic practices during their

conjugal lives. Although the practice of the dowry as a form of marriage transaction is not

positively seen, it continues as a practice in society as a sort of open secret. The dowry system

therefore increases the vulnerability of women, turning them into burdens for their family

(Chowdhury, 2010).

It is found in the study areas that poor people continue to practice this system due to poverty

and material deprivation. Poor women in this case become the greatest victims of dowry

violence due to lack of money in their parent’s hands. In this situation, microcredit has been

chosen as the best alternative to offering dowries to the bridegrooms during or after marriage.

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When microcredit was introduced in the village, poor women opted for it as an instantaneous

and innovative source for providing dowries through borrowing money from NGOs. This is

one kind of coping strategy adopted by the credit-borrowing women when they need to pay

money to their daughter’s husbands as per their demands. In some cases the newly married

daughters of the female respondents are forced to borrow money from their parents. Finding

no other alternative – and yet wanting to cement the relationships with the husband and his

family members – they place demands on their parents for money in order to satisfy their

husbands. The bride’s parents not only offer cash to bridegrooms, but also offer marital assets

such as furniture, electronic goods and other items necessary for the households.

Several notable instances of this kind were found in the study villages. Amongst them, one

center-chief of BRAC took a loan in order to buy her son-in-law a CNG auto rickshaw so that

he can have the means to provide for his family. The center-chief’s daughter, her husband and

one little baby lived in her mother’s home. Although the mother does not particularly want

them to stay with her, she cannot say anything for the sake of the conjugal security and future

of her daughter. The center-chief lady reported that her son-in-law has been a burden on her as

he does not drive CNG auto rickshaw regularly. As a result, she has to bear the double

responsibility of maintaining both her own family and her daughter’s as she is the matriarch.

One young lady of Grameen Bank named Shilpi (age 28) who was married off in a neighboring

village shared her story of borrowing loans in order to negotiate conflict with her husband and

other members of her husband’s family. She puts her experiences as:

“I borrowed a loan secretly in consultation with my mother to open a workshop for my

brother-in-law. None of my husband’s family knew it. Every day my husband put

pressure on me to fetch money from my parents’ home. As I could not give them

money, everybody became dejected. Everyone’s face became gloomy for this. My

husband did not even talk to me warmly for many days. One day he raised his hand on

me. I finally took a loan to get rid of the conflicts and quarrels just to sustain the

relationships. I borrowed money in my name. My parents helped me pay the

installments.”

This way poor rural women use credit as form of dowry in order to resolve conflicts between

husband and wife, and sometimes with members of husband’s family. Poor women in this

regard have found microcredit to be an immediate solution to their problems. It is learnt from

the female respondents that they consider microcredit a palliative for resolving the feuds

between husband and wife. A good number of respondent women have reported that they

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borrowed money to appease their son-in-law in spite of their unwillingness to give credit

money as dowry – which has not only put additional burdens on them – but also paves the way

for the son-in-law a new path of seeking financial cooperation from his wife’s parents in case

of necessity. A study on domestic violence against women in Bangladesh found that while

marriage-related assets may protect women against violence by raising her status in the

husband’s family, it might also encourage the husband to demand more, which may lead to

further threats or incidences of physical abuse (Toufique & Razzaque, 2011). Cons and

Paprocki’s (2010) study in Bangladesh’s remote rural setting also argued that microcredit was

effectively reinforcing dowry practices in the village. The experiences of the female borrowers

indicates that the system of dowry remains prevalent in the rural society, and NGO microcredit

interventions have not sufficiently addressed the issue through creating awareness about this

archaic practice. Rather poor women regard microcredit as the easiest way for resolving marital

feuds by utilizing money borrowed on credit as a form of dowry to the bridegroom, which

functions as a bulwark for the marital security of the bride.

8.8. Encountering Social Barriers and Negotiating the Traditions and Values?

In rural Bangladeshi society, women usually do not visit certain spaces, which include places

like the local marketplace, social gatherings for public activities, and places that are dominated

men. Women usually remain at home doing household activities, while men engage in activities

beyond the precinct of home. Men go to market and buy things from local vendors when doing

the shopping. The majority of the work is done by men, and does not fall within the spectrum

of women’s duties as designated by the society and its traditions. It is observed that when

visiting relatives in distant places, women only go there with their husband, son or other male

members of the family. They rarely visit such places alone. It is even found that women who

need to borrow loans from NGOs do not go to the NGO area office alone.

My respondents told me that they have no choice but to go to the NGO office to take a loan

because it is part of the program requirements to be followed by clients. In this situation not a

single woman has said that they could visit the NGO office alone to settle official formalities.

They go to the NGO offices with husbands, other family members, or with other members of

their neighborhood who also want to borrow credit. In many cases, the perception of women

has not changed following their involvement in microcredit programs. Women simply visit the

local loan center located within a stone’s throw of their neighborhood. Even in this context

they most often do not go to the center for paying installment alone. Given the average age of

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the clients, young women most often do not visit any places without any person accompanying

them. If the client is aged, the society considers her less able to move around alone freely, while

on the other hand, young clients also cannot visit the local center alone. I asked my respondents

again why they do not visit any place alone, and how they feel about this. I also asked them

whether they have encountered any problems in society after their involvement in microcredit

programs. All of them have said that the situation has bound them to be in public places. They

did not frequently go out prior to borrowing NGO microcredit. One of my respondents named

Dilara (age 45) of Grameen Bank shared her opinion about going out in public places:

“The elders of our neighborhood do not perceive our visits to the NGO office and public

places positively. In spite of this, we still go out. They will not feed us. We have to go

to the NGO office in front of other men because we need credit. We did not go before.

Women have no need to go out aside from an emergency. We have to go out for this

credit [kisti]. This is not good for women. It has tarnished our image. Some people do

not see it positively either.”

I asked Dilara why she feels that going out in public has tarnished her image in the community,

since other women like her are involved in the microcredit programs as well. She commented

that not all women in the neighborhood have taken loans from NGOs. Those women who are

members of microcredit programs also do not like going to the NGO offices, nor do they enjoy

presenting themselves in front of the NGO workers, but the social reality dictates that this is

one of the only means for their continued survival. I was talking to a young lady named Masuda

Akhter (aged about 24) who was a client of Grameen Bank. She spoke about the mobility of

women in public places in the following way:

“Women should not go to public places alone, but I cannot avoid going to the

NGO office due to my loan obligations. I go to the NGO office and local center

with other women. If I go to the meetings of men, people will disrespect me. It

will disparage the prestige and honor of my father and brother. My husband

performs all outdoor tasks. I need not go out.”

It is true that microcredit has brought women out of the domain of the family for a particular

reason, but it has not brought about a substantial change in the outlook towards the life of these

women. Women’s visiting of the local center is a calculated strategy of microcredit programs

of NGOs in order that women comply with organizational regulations, and does not create any

awareness about the benefits of mobility in public places for the poor women. Hashemi et al.

(1996) found in their study that women’s involvement in microcredit programs has increased

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their mobility in public domain, which has been identified as one indicator of empowerment.

However, I argue that women’s mobility in a particular social space on a scheduled date does

not necessarily ensure their automatic empowerment. If women can visit market places or

engage in actual economic transactions, the meaning of mobility would be more fruitful in the

real sense. Referring to Adam Smith, Amartya Sen (1999) in his seminal book Development as

Freedom argues that appearing in public without shame is important factor for development.

In the context of my study area, the situation of poor women does not fit into the proposition

of Adam Smith.

My study has revealed the opposite aspect of the phenomena, indicating that while women’s

participation has in certain instances increased their mobility in society, women encounter

social barriers and have to comply with the traditional norms and values of society, which

prevents them from challenging the patriarchal social system. The problem does not end here.

Elders in the neighborhood also raise many questions when women begin participating in

microcredit programs. Shimul of Grameen Bank in Chatal village shared what local elders said:

“You have many income-earning people. Why do you and your wife take loans? Drawing loans

through your wife will result in socially bad things.” Whereas the husband of that respondent

told me that, “I myself do not call my wife as sweetly as the NGO officials do. NGO-bosses call

my wife so enticingly. My wife goes in front of many people that I dislike.”

I have an interesting case to present here. One of my respondents named Tania of Grameen

Bank was an undergraduate student at a private University. According to the rules of microcredit

programs, unmarried women cannot be offered loans. Tania, however, was deemed an

exceptional case given the economic status63 of her family. Grameen’s loan center is situated

near a local market place where there are a cluster of shops along with a CNG auto rickshaw

stand, and women from the other side of the village have to go to the local center when passing

by that local market place. As a university student, Tania had a good social status compared to

other women in her community. She went to university everyday by auto rickshaw and mixed

with other people too in the university campus. However, whenever she is in her neighborhood

her attitude is different because she has to conform to the traditional norms and values of the

63 Tania borrowed a loan in her name to help her brother go abroad. Her family income is stable and her brother

sends money regularly to maintain the family. Therefore, unlike other middle- or lower-income households, her

family therefore does not suffer financial problems.

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rural social structure, and acts accordingly. I asked her how she manages to go the local center

to repay her loan, as she has to cross a market before being able to reach it. She said:

“I go to the NGO center through the houses beside the market by putting a veil on my

face. I do not go through the market or other public places, because people consider it

bad. I am a girl of this village. We women do not go to “male places”. If local people

see me crossing the market place, the image of my family will be tarnished. As a girl

of this neighborhood, I have to consider the honor of my family.”

I found this to be the typical opinion of poor rural women. Women’s mobility in public place

is an essential component that influences the possibility for changing their social and economic

status, but the way it has been taking place does not necessarily engender the empowerment of

women by taking them away from the precinct of home. Microcredit is simply a strategy for

NGOs to incorporate women into development activities, but the program structure and system

of delivery does not encourage a change in mindset amongst the female clients. When women

are able to make economic transactions in the marketplace like their male counterparts, their

mobility in the economic and productive sense could lead to the fuller utilization of their

potentials. As is mentioned above, female borrowers of microcredit programs usually do not

go to the NGO offices or local loan centers alone. However, microcredit programs have created

a new social reality that the poor women have to adjust to in order to continue participation in

the program. In the rural social context of Bangladesh – and particularly in my study areas –

it is found that women have gone to visit their relatives with their husbands or with their family

members but after joining the microcredit programs they now go to the NGO offices and loan

collection center with other women. They still cannot go anywhere unaccompanied because

women strictly observe local cultural values. One of my respondents named Nazma (age 45)

has said, “Women have no freedom like men. We have to ask permission from our husbands if

we want to visit our parents’ home.” Another woman also said, “A woman who fears God

cannot move about without the consent of her husband. To disrespect your husband’s wishes

is tantamount to being the anti-god.” This is the social and cultural context of rural society in

which women live their lives. While having informal talks with NGO workers, I learnt that

they do not offer any programs that may trigger confusion amongst the local people, forcing

the programs at controversies and risk that ultimately may create challenges for the programs

to survive. If microcredit programs could engender ideational changes amongst poor clients,

the empowerment of the women would be more meaningful in an authentic and transformative

sense.

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8.9. Empowerment and Economic Rational Women

The key objective of microcredit programs is to create an opportunity for the empowerment of

poor women through the alleviation of their poverty. The ground reality revealed implies that

the empowerment of women through microcredit programs has been little more than mere

development rhetoric because of the fact that the main motivation of microcredit programs is to

maximize profit by reducing transactional costs. Women’s self-employment leading to their

self-empowerment remains a distant reality. Women are the borrowers of loans and the bearers

of risk, while men are the controllers of finance and are the ones engaged in credit-driven

enterprises. As a result, women have not been able to develop the potential to improve their

social position. The experiences of female respondents indicate that they have not been able to

improve their fallback position in the family and society because concepts of empowerment

such as “agency” and “autonomy” are absent due to their lack of control over loan money, the

lack of decision-making authority over familial issues, and the patriarchal attitudes of their male

counterparts. In this regard employment and empowerment is simply a rhetorical argument in

the context of my study areas, given the social and cultural background that shapes and

determines the course of thinking of men and women and directs their actions and behaviors

accordingly.

The social construction of gender norms has contributed to a different and gendered habitus,

and this is something that microcredit programs are unable to address with the ‘credit alone’

approach of development in general and the empowerment of women in particular. As Bourdieu

(2001) states, “gender is socially constructed and produces a gender differentiated habitus”

(p.55), and gendered habitus structures the decisions, behaviors and opportunities of men and

women in society. Microcredit programs appear to have failed to challenge the existing system

of gender stereotypes due to lack of ideational and educational programs for poor rural women.

Therefore, the programs have either implicitly reinforce the traditional patriarchy in society, or

kept the system functional by shaping and regulating the economic conduct of the clients. The

motives of the programs appear to have increased the organization’s financial portfolio at the

expense of clients’ discipline in the regular repayment processes. Therefore, women are unable

to be ‘rational economic women’ by way of incorporation into microcredit programs (Rankin,

2001) mainly because of the lack of their control over the loan money and access to market

transactions.

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I also have found in my study that providing credit to poor women compared to men is much

more convenient for the NGOs as women have been shown to be more likely to repay their

loans. The local managers of microcredit programs have confirmed that the likelihood of moral

hazards is lower among women than men because of the social and cultural formation of society

which influence the behavior of people. So from a strategic point of view, since women are

more easily manipulated (or, coerced), microcredit programs target them when offering loans

in order to safeguard the financial viability and sustainability of the programs. Indeed, women

are instrumental to the successful operation of NGOs microcredit programs, but unfortunately

NGOs have not yet proven successful in engendering empowerment amongst their poor female

credit-clients.

Since structural change in society does not occur rapidly, empowerment of women must be

conceived as slow-moving but continuous process. Ideational change amongst poor women is

a necessary condition for them to achieve empowerment and exercise greater autonomy and

agency in their choices and social contexts. Indeed, women’s empowerment can only be

achieved when they themselves confront the existing norms and culture, to effectively improve

their wellbeing (Swain and Wallentin, 2007). Besides, microcredit NGOs have brought women

into the arena of the market and construed them as the agents of economic transactions and

disciplined social subjects. Women are the ones who are being manipulated and shaped as per

the needs of the organization through the operation and management of microcredit programs.

Foucault (1977) pointed out that “a body is docile that may be subjected, used, transformed

and improved” (p.136). Women have docility who can easily be controlled and used for the

convenience of the management of credit since the disciplinary practices engender the “docile

bodies” of women (Bartky, 1988:25). This is less so for men, who cannot be used as a

convenient agent of development the way women are for the workings of the programs, given

the cultural backdrop of rural society.

Microcredit programs have made women submissive and docile through the imposition of rigid

practices and obligations that the client women have to abide by in order to survive and remain

in the programs. It has transformed them into being the ‘entrepreneurs of themselves’, in which

the disciplinary apparatus is applied for the operational convenience of the programs. Instead

of providing an avenue for their clients to emancipate themselves and their families, this

mechanism ensures that the economic interests of NGOs are safeguarded, whilst at the same

time making women more subservient to organizational norms, thereby obliging them to

comply with the NGO mandate. Microcredit has brought new areas under coverage that had

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traditionally been beyond the formal economy prior to the emergence of NGOs and their

promises to alleviate poverty and stimulate women’s empowerment. A market-oriented

microcredit approach therefore appears to be unhelpful for the empowerment of their clients for

they over emphasize the recovery of loans in seeking to sustain the programs, and it has also

failed to furnish a positive educational environment which could potential sow the seeds of

autonomy and freedom for poor women in rural Bangladesh.

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CHAPTER 9

Poverty and Social Vulnerability of Rural Poor Women

This section of the dissertation goes on to analyze the nexus between poverty and social

vulnerability of rural poor women in the context of Bangladesh. A special focus is afforded to

the link between poverty and credit, while looking at how credit as a new economy in the rural

social setting has been a coping strategy for many of the poor women. Furthermore, the use

and management of credit by the clients so as to ascertain whether poor women’s participation

in income-generating projects could reduce the level of poverty and vulnerability of this target

group through their involvement in market-based microcredit.

9.1. Poverty and Vulnerability Nexus

In contemporary developmental thinking, poverty alleviation has been a major concern given

the multifarious negative effects on the progress and development of a country. Thus

developmental policy has increasingly been linked with poverty reduction (Dutta et al., 2011),

drawing the attention of academic scholars and development practitioners. Nonetheless, there

remains recognition that reducing the level of poverty alone may not be the most holistic or

robust approach to sustainable development (Dutta et al., 2011). Amartya Sen (1999) in Asian

Week Magazine suggests “… [that] the challenge of development includes not only the

elimination of persistent and endemic deprivation, but also the removal of vulnerability to

sudden and severe destitution”. The World Bank (1998, cited in Dutta et al., 2010) in the same

vein argues that “protecting vulnerable groups during episodes of macroeconomic contractions

is vital to poverty reductions in developing countries” (p.1). It is seen everywhere that poor

people are more vulnerable to risk because they are not able to save enough money to prevent

any exogenous shocks (World Bank, 2001). They spend the lion’s share of their income

covering food cost requirements. As a result, they cannot save adequate amounts of money to

bear necessary costs such as educational expenditures for children, medical costs for their

family members, or even for their own subsistence. In such circumstances they are said to be

vulnerable to economic shocks during periods of crisis because of their inability to mitigate

this condition with spare financial resources. Therefore, vulnerability is not only the result of

exposure to risk; rather, socioeconomic processes are also vital in determining the ability of

people to address these risks (Chambers, 1989).

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There has been lavish use of the words ‘vulnerable’ and ‘vulnerability’ in academic writings,

and these are common terms in the existing lexicon of development. Vulnerability is not

identical to poverty. While poverty means a lack of available resources to support and satisfy

the needs of a person or household, vulnerability refers to the defenselessness, insecurity and

exposure to risks and shocks rather than lack or want (Chambers, 2006). Therefore,

vulnerability is the possibility of suffering a decline in wellbeing dropping below the poverty

threshold (Yves Duclos, 2002). There is actually no straightforward definition of social

vulnerability because of its multidimensional nature and multidisciplinary perspective. A

number of disciplines such as economics, anthropology, sociology and even engineering use

the term vulnerability (Alwang, et al., 2002; Adger, 2006). Generally, the term “vulnerability”

is related to climatic issues and the subsequent hazards people face, in addition to food

insecurity (Dutta et al., 2011).

The conventional understanding of “vulnerability” has taken on a wider shape in the formation

of social, economic and political perspectives over the course of time. The reason why

“vulnerability” is interconnected with the impoverishment of people owes to the lack of a

capacity to augment their income, built assets for the households, increase the knowledge

required for improving personal skills and competencies, and thereby develop career

opportunities and prevent social and political hazards. As a result, the shift in focus from the

environmental vulnerability of people to social vulnerability under specific conditions has

drawn much academic and policy attention, taking into consideration the development of poor

people through poverty alleviation by increasing income or raising the level of consumption

that minimizes their vulnerability. Poverty in this case is “deprivation of wellbeing” as defined

by the World Development Report (World Bank, 2001a:15). Therefore, poverty refers to the

forms of economic, social, and psychological deprivation experienced by those people who

lack adequate ownership and control over or access to resources to maintain minimum

individual-or collective-levels of living (Ullah & Routray, 2007). Poverty is an ex-post measure

of a household’s wellbeing, which reflects the present state of deprivation, lack of resources,

or capabilities to satisfy current needs. Vulnerability, on the other hand, may be construed as

an ex-ante measure of wellbeing not by considering how much a household is currently well

off but by considering the future prospects of those households (Chaudhuri, 2003).

Moreover, vulnerability is also linked with the notion of food insecurity in the households or

in personal levels, which is the limited or uncertain ability to acquire food in socially acceptable

ways (Jalal et al., 2015). In many developing countries of the world, food insecurity is a

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prevalent issue and a cause of concern for governments to tackle. Some strategies include

intervention programs in the form of food aid and food relief, and the supply of other materials

necessary for satisfying urgent needs during periods of crisis. More specifically and with

reference to Bangladesh, the ultra-poor women are especially vulnerable to poverty and food

insecurity, and they generally have been excluded from recent improvements in the hunger and

poverty rates in their country (McIntyre et al., 2011). There is also increasing attention from

researchers investigating the underlying connections between vulnerability and food insecurity,

which are often caused by disease, war or other factors (Sen, 1981). Entitlement-based

explanations on vulnerability focus almost exclusively on the social aspect of institutions, such

as wellbeing, class, social status and gender as important variables for analyzing the situation,

while other vulnerability research on natural hazards developed integral knowledge of

environmental risk based on geographical and psychological perspectives in addition to social

indicators of risk (Adger, 2006).

Vulnerability is the likelihood of a household falling into poverty, given the present status of

the household (Abraham & Kumar, 2008, also see Dutta et al., 2011). Prowse (2003) describes

that when vulnerable populations meet with some hazards or risks, the result is disaster like

poverty and deprivation. Hence, the vulnerability of people to poverty and their exposure to

other social and man-made risks not only reduces their capacity to ensure their personal and

collective wellbeing, but it also impedes development in both the collective and concrete sense.

Therefore, risk reduction and hazard prevention in situations created out of the sociocultural

milieu or institutional system of governance requires a comprehensive vulnerability assessment

framework, which has been of growing concern to many in the developing world.

Consequently, “the concept of vulnerability has been a powerful analytical tool for describing

states of susceptibility to harm, powerlessness, and marginality of both physical and social

systems, and for guiding normative analysis of actions to enhance wellbeing though reduction

of risk” (Adger, 2006:268). Amartya Sen (1999) contends that poverty is the result of the

capability failure of an individual, resulting in the reduction of wellbeing. In this connection

poverty describes the current status of a person concerning the attainment of a critical level in

certain dimensions like income (Abraham & Kumar, 2008).

The most vulnerable individuals, groups, classes, and regions are most exposed and yet have

the most limited coping capacities, meaning they are double disadvantaged (Watts & Bohle,

1993).

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Moreover, vulnerability exists in a multidimensional social space that is defined by political,

economic and institutional capabilities of people in particular places at particular times (Watts

& Bohle, 1993). Similarly, in the South Asian context “vulnerability is the space of partial

enfranchisement without secure entitlement” (Watts & Bohle, 1993:119). The entitlement

failure of a person offers him limited scope to social and economic space thus pushing him to

poverty and vulnerability, as he cannot secure entitlement to a minimum level. Vulnerability is

not the only cause of poverty but it can also reinforce the income processes, which contributes

to poverty and further diminishes the expected welfare of the poor (Murdoch, 1994). Thus

vulnerability is actionable in a more critical social and environmental condition and increases

the prospects of an entity falling below the poverty threshold.

However, poverty and vulnerability is context specific because of its relative nature. So

understanding poverty and vulnerability in the context of a traditional society like Bangladesh

requires understanding the society’s cultural background and customs practiced by the people

in that particular social setting because vulnerability is “embedded in complex social relations

and processes” (Hilhorst & Bankoff, 2006, cited in Singh et al., 2014:73). The past history of

society and the perception and knowledge of people is necessarily an important factor for

explaining the experiences of the poor people in order to appreciate the concept of

vulnerability. Cain (1983), for example, brought to attention two fundamental spheres of risk

in rural Bangladesh that pushes poor women to be vulnerable: these critical risks take the form

of, firstly, the patriarchal social system expressed through gender based differences in wage

rates and access to and control over resources, and the other is rooted in property rights. Thus

vulnerability is the byproduct of social, cultural, and political institutions. It results from social

inequalities and patterns of social relations manifested in the root of social structural barriers

that are resistant to change (Singh, et al., 2014). The social system contributes to the production

and reinforcement of poverty and vulnerability of people through various mechanisms

employed for the distribution and management of resources.

The concept of social vulnerability is the construction of characteristics of a person or group in

terms of their capacity to anticipate, cope with, resist and recover from the impact of hazards.

Therefore, social vulnerability is the combination of factors that determine the extent to which

a person’s life and livelihood is put at risk by a distinct or identifiable event in society (Blaikie

et al., 1994, cited in Singh, 2014). Moser (1998) defines “vulnerability as insecurity and

sensitivity in the wellbeing of individuals, households or communities in the face of a changing

environment” (p.3). Vulnerable individuals, households, or communities that encounter

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adverse situations often find that their relative wellbeing falls short of the minimum for survival

and are typically unable to cope with the emerging shocks and hazards. The most important

facade of the problems is associated with the assets available in the possession of individuals;

households and communities that can help overcome their vulnerability.

According to Moser (1998), vulnerability focuses attention not only on the identification of

threats but also on resilience and responsiveness, in exploiting opportunities, and in resisting

or recovering from the negative effects of the changing environment. Moser further asserts that

vulnerability is linked to asset ownership. Therefore, people having more assets tend to be less

vulnerable (Moser, 1998) because a greater proliferation of favorable assets is associated with

lower incidences of vulnerability (Bernard, 2004). Kuhlecke et al. (2011) in their study of

European countries find that vulnerability is highly dependent on local conditions such as

spatial, socioeconomic, demographic, cultural and institutional contexts. Socioeconomic

factors are associated with different combinations of poverty and economic vulnerability

(Whelan and Maitre, 2010) that is affected by a number of factors such as economic resources,

power relationships, institutions, or cultural aspects of the social system (Lundgren & and

Jonsson, 2012). Vulnerability can be traced to multiple factors rooted in physical,

environmental, socioeconomic and political causes (UN, 2003).

Moreover, there has also been reference to gender-based discrimination in the household

decision-making processes and their impact on a households’ ability to command productive

resources (Dwyer and Bruce, 1988; Sen 1990). Similarly, there is evidence that vulnerability

is linked with the household structure, the needs of children or the elderly, and the frequency

of family violence (Harris, 1981; Evans, 1986). Many other factors are responsible for

contributing to vulnerability including poverty, hunger, rapid growth of population,

asymmetric gender relations, paucity of access to labor market, poor health conditions, low

levels of education, lack of access to or control over resources, (Bernard, 2004; Singh, et al.,

2014; Dutta et al., 2011).

Women in the context of rural Bangladesh are considered distinct social entities having

asymmetric gender relations in the households and restricted mobility in the wider society,

limiting their prospects for integration in the development processes. The space of a female’s

engagement in the gainful economic activities and other productive work that could

presumably yield immediate returns are remarkably narrow, though their contributions to

family services in the form of unpaid labor significant. Gender disparities are reflected in

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different levels of programs ranging from state action to the implementation of those programs

for the development of the poor. The forms of gender disparity is manifested in the employment

opportunity, education facilities, health care services, social security, access to public goods

and services and so on. As a result, women have systematically been marginalized in the society

and remain in the confines of the household, which forces them to be more dependent on male

members of the family. As women have no available resources at their disposal and are not

directly involved in any income-generating activities, they remain vulnerable compared to their

husbands and males in general.

NGOs have come forward to provide the necessary services for women in order to alleviate

poverty and reduce the level of their vulnerability through microcredit as a neoliberal

development intervention tool. The main focus of the following section is on the nexus between

poverty and vulnerability of women and how microcredit programs have actualized to their

stated goals while also taking into consideration other dimensions of problems engendering

poverty and their associated effects. Drawing upon the theoretical underpinnings of the above,

I have made efforts to assess the impact of microcredit on the reduction of poverty and

vulnerability of the poor women in rural Bangladesh.

9.2. Poverty Alleviation and Credit Relations

The concept of poverty has divergent meanings, given its dynamics, intricacies, and definition

(Ullah & Routray, 2007), and different people view poverty in different ways (Westover,

2008). Moreover, poverty is a contextual term in the sense that the experience and magnitude

of poverty differs from person to person since poverty is not experienced in the same manner.

There is also wide range of variation in the experiences and corrosiveness of poverty in terms

of gender, age, and socioeconomic background of individuals, geographical location, health

conditions and educational background, amongst others,

Bangladesh is in such a condition hosting a large swathe of its population in a traditional rural

economy, engaging many of the population in low-return employment, with women being the

most vulnerable social entity due to their relatively disadvantaged position in the households

and in the society. Besides, rural society is characterized by extremely unequal access to land,

which in this context is the backbone of the economy and also a critical productive resource

(BBS, 2001, cited in Ullah & Routray, 2007). Well over 50% percent of rural households are

functionally landless (Ullah & Routray, 2007). The rural community consists of various

categories of people in which small class of substantial landowners has developed a wide range

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of roles in rural society as land-leasers, moneylenders, merchants, legal authorities and village

leaders (Siddiqui, 1996). Besides, the poor people in Bangladesh are more likely to belong to

households with many dependents, lower education level, engaged in low paid daily wage

labor, own little land, and are usually less likely to receive remittances (Zaman, et al., 2012).

Underemployment and unemployment are the manifested features of economic life of rural

people in Bangladesh (Rose, 2002). With this backdrop, lifting a large section of rural

population-the rural poor women in Bangladesh-NGOs have been in the front line of alleviating

poverty among women and mitigating their vulnerability in this social context with microcredit

interventions.

A large number of NGOs have been working in Bangladesh since the last three decades aiming

to alleviate poverty of the mass population in rural Bangladesh (Ullah & Routray, 2007). Many

microcredit NGOs have been in operation in rural areas, mostly targeting women as the most

deserving beneficiaries of these intervention programs on the premise that they have limited

access to credit and labor market, enjoy bare minimum facilities and also have lopsided gender

relations in the households. As a result, microcredit has been a pervasive phenomenon and a

popular tool to heal the wounds of poverty and reduce their vulnerability, though the effects of

microcredit on poor women remains contested. Different arguments regarding the impact of

credit on poverty alleviation in Bangladesh exist, but they are not clear-cut (Zaman, 1999b).

There are studies that confirm the potential that microcredit has to significantly reduce poverty

by integrating poor women in the programs (Khandker, 1998; Khandker, 2005; Khandker &

Samad, 2013). There is also supporting evidence demonstrating the potential impact of

microcredit on reducing the vulnerability of the poor. Some authors found that the provision of

microcredit is positively correlated with strong crisis-coping mechanisms, asset building

capacity, diversity of income-earning sources, and improved status of women (Hashemi, et al.,

1996; Montgomery et al., 1996; Murdoch, 1998;). The findings of another study confirm that

microcredit has given its clients the ability to cope with calamities during the devastating floods

and reduced their vulnerability, while contributing to raise income levels and savings of the

poor women (Latifee, 2003). The following section offers an analysis of the effects of credit

on the clients and their households in terms of poverty and vulnerability reduction.

9.3. Credit as Coping Strategy and the New Economy

Most of the poor women in rural Bangladesh, specifically in the study areas get involved in

microcredit programs of NGOs only under certain critical social and economic circumstances,

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which otherwise is assumed to be difficult to access. Microcredit is rooted within a broad range

of social, cultural, economic and ecological realities (Cons and Paprocki, 2010). Moreover, the

poor do not have access to the formal financial institutions due to lack of collateral and are

forced to resort to informal credit market such as money lenders (Mallick, 2011). Therefore,

accessing the opportunities to credit enables them to have the prospect to get out of financial

difficulties, mitigate hardships and overcome any other problems encompassing their lives.

NGOs going door-to-door of poor people has provided them the opportunity to think of their

future in a renewed way. Many of the women take loans with the primary purpose of satisfying

their basic needs to survive. Our moral philosophy and general understanding creates a space

for thought and gives us further impetus to think that every human being has a right to survive,

but in a different way given the magnitude of the problems, criticality of the conditions

underlying with them, experience of hardships, means of survival and technology for tackling

those situations which continue to plague humankind. As mentioned above poor people have

truly not any access to formal commercial financial organizations that can offer them credit in

a soft and flexible condition as those [NGOs] now have been at hand.

To make matters worse, there is no such organization that provides services to the poor that

suit their needs with some degree of flexibility. NGOs, in this convoluted situation, have been

flexible financial managers that are able to meet the immediate needs and other life sustaining

necessities. Practically, although it comes out to be an implausible statement, in the rural

society of Bangladesh there seems to be no other better alternative form of social and economic

organizations aimed at serving the poor by providing them with financial supports in order to

promote their social and economic conditions with the interventions of credit facilities as the

NGOs are currently doing at those levels.

In the study areas once there had been the prevalence of the so-called informal money market

operating behind the curtain and those are still in existence, although only reportedly on a small

scale.64 Persons who were involved in this business are popularly known as moneylenders;

trading money with the poor in the form of usury capital. This informal system of money

market has not found wide acceptance. There is a saying in the village that “taking money on

interest from local moneylenders is like opening the door of the hell for the receiver himself.”

Despite this, such financial transactions continue to operate in an open secret way. Since the

64 Local moneylenders once had been prevalent in the rural areas but now a days they have been operating their

money making business at small scale due to appearance of NGOs with credit in the rural market.

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demand side of the poor people was the merit position for those money mongers who had

cheated money out of the poor by applying exorbitant interest rate.65 Poor people end up as

victims when they face no other alternative means of survival except to take a loan from local

informal moneylenders. This is also another context to reinforce and buttress the argument for

the emergence of NGOs in the village, paving the way for poor women’s participation in

microcredit programs.

Currently some prominent NGOs like Grameen Bank and BRAC, are working in the villages

with the mission of serving the poor women with the delivery of microcredit that has largely

replaced the informal moneylenders. The emergence of NGOs in the villages ushered in a new

episode of social and economic transitions pervading the poor women’s lives. The women have

been striving to adapt with this new economy. I have designated this economic system of

microcredit specially designed for the development of poor women as the ‘New Economy’

given the fact that women’s involvement in this bourgeoning rural economy has created new

social reality for them, which have been explained in the succeeding sections on the basis of

the felt experiences of the female microcredit clients.

9.3.1. Emergence of the New Economy: Drawing on Clients’ Views

It is relevant to take into account the information of the husbands of female credit clients.

Although women are the target groups of microcredit programs, the use of the loans remains

in the control of husbands. In this case, the experiences and opinions of husbands with regard

to the effect of credit on their lives is in no way a less important matter. I will describe the

responses of some of my respondents’ husbands. The start of the story is: one day in the late

morning I, along with two of my wonderful research assistants, went to one of my respondent

– Shimul’s home in Chatal village. When we entered her tiny tin-shed house with only one

living room for all of them, we found her husband was asleep on a wooden cot and her little

baby was continuously crying lying on the floor for food. At the same time, the client lady was

poking fire with a stick in the earthen woven, while cooking something within the space of the

main living area. She tried her best to pacify the crying baby but it was to no avail. I requested

one of my research assistants to go to a nearby shop to buy some chocolates and potato chips

for the baby so that she could be appeased soon in an attempt to ease the situation. The lady

seemed to have felt shy and guilty of being stung by morality for some of our time was already

65 The interest rate charged by the local moneylenders is much higher than that of the NGOs. Despite this people

used to borrow from them because of the lack of better alternatives. Now NGOs have replaced them by offering

credit to poor women under more flexible terms and conditions, though the old system continues to exist.

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lost without results. The sign of innocence was vivid in her face. Sensing her shyness and

feeling of guiltiness, I took the opportunity to show my sympathy to her by word of mouth.

The man was still sleeping. The lady was in a mood to talk to us but the situation did not favor

her to continue a conversation with us.

In the meantime, the man woke up and greeted us with a question about how he could be of

help. I introduced my two research assistants and myself before expressing our purpose to visit

his house. He said, “My wife is busy today managing two of our crying babies. That is why

she is not in a position to continue talking to you. Better you talk to me today and then please

come tomorrow morning to talk to my wife so long as you need. We are ready to help you to

give you the piece of information you need for serving your purposes. We were just looking

forward to having an opportunity to disclose the secret of the NGO activities with microcredit.”

He began his story about the microcredit and his experiences with regard to the borrowing and

paying back the loan. Her mother was also present there who had a long 22 year of involvement

in microcredit programs of Grameen Bank. He started to put forward his opinions and

experiences about microcredit programs of Grameen Bank that goes as follows:

“Samity66 [group-lending] means loss, and your life may vanish too. They [NGOs]

show us milk and give urine67 [They show us the best but give us the worst]. There is

no resemblance between their words and deeds. We borrow loans out of economic

necessity. There is no benefit from what we do with the credit money [kistir takay]. If

one fails to repay the installment in time, they say: ‘you feel comfort while eating; don’t

you feel the same as you pay back?’ If somebody cannot pay the installment, she is

insulted in such a way. I got a good lesson after my wife joined the group. There is no

happiness in our lives. Credit has spread salt on the wounds of our checks. That means

hardship after hardship, burden after burden due to loans. Credit is the killer of

happiness. It has taken away all the vitality from our lives. We have been surviving on

God’s pity. No NGOs can give comfort to people. Thousands of people are being held

hostage by NGOs under the heap of installments [kisti]. Whoever I have seen could not

be happy in life with loan money; those that have no loan obligations is happy. They

have no problems. All my comforts have turned into discomforts. Credit is the curse of

66 In the program village group-lending is popularly known as samity because poor women have to form a group

before being able to undertake a loan. 67 In Bangladesh the word has negative connotation. It means that NGO workers try to convince prospective

clients that loans are useful for lifting their life out of poverty, but when the women join the program their [NGO

workers] attitude is different as to recovering the installment from the clients.

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our lives. I want salvation from God. I will do taoba68 [want redemption] to God after

paying up the loan.”

This is just a summary of the experience a husband had from his wife’s participation in

Grameen Bank’s microcredit programs. It is worth investigating why poor people get involved

in microcredit programs despite having problems. The straightforward answer lies in the

realities that force them to be involved in these poverty alleviation projects. Because poor

people in the rural areas currently have no better choice besides credit. Approximately 68% of

respondent women of both Grameen Bank and BRAC regardless of their income groups have

said that they have not been benefitted from engaging in microcredit programs, but rather it

has created multiple problems mainly related to repayment of the loan. There hardly exists any

cases in which microcredit is ensured to work without leaving an additional burden on women

borrowers. This is because most often the loan money ends up consumed for satisfying priority

needs and used for activities that provide no remarkable immediate returns. This in turn gets

them into trouble when they have to repay the loan. Most of the women have borrowed loans

in order to cope with economic and other family crises. I asked my respondents several relevant

questions. Why do you take loans from NGOs? Do you benefit from credit and how? Do you

have any problems repaying the loan, and how you manage them? I got some striking

information against these queries from the respondents. Among them, one respondent named

Nehar Begum (age 40) of BRAC puts:

Would you borrow money from others if you have money in hand? My husband was

unemployed for long time. We had no money in hand. Nobody lent us money. I

borrowed loans from BRAC to start a business for my husband. Before taking a loan, I

thought it would be good for us. After borrowing the loan, the problems had begun with

the installments. We got into the loan cycle as soon as we had finished one installment.

The week comes sharp. When the loan [kisti] is over, I again take another loan. Credit

has bound our hands and legs.

This is a telling experience of one of the respondents among many others that are in a similar

situation. Achia Khatun (age 45), one of BRAC members of microcredit programs who took a

loan to purchase a rickshaw for her husband reported to have faced problems while repaying

the loan because the earnings from pulling a rickshaw were insufficient to maintain household

expenditures, and it was thus difficult to save even a small share of it to repay the loan. As a

68 In the religion of Islam taoba is important for getting rid of sin. Making taoba means to abstain from doing any

misdeeds and to never repeat that error again.

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result, they have to comply with the conditions of repayment by borrowing from others on a

weekly-installments basis. All poor women who opted for microcredit were forced by the

crushing reality of chronic poverty, and were also influenced by other women in the villages.

Some of them remained uninvolved in the beginning due to information asymmetry about the

costs and benefits of credit. Eventually, however, they still became members of microcredit

programs of Grameen Bank and BRAC when word spread that many woman from the same

locality had joined the program. It was also learnt that some women encouraged other women

to borrow loans from NGOs in order to increase the number of the group members, which later

caused frustration among some women because of the failure to reap expected benefits from

credit-driven small business. Peer influence in addition to longstanding economic crisis and

dearth of regular income for the most part in the poor family have been the main motivations

for women’s participation in microcredit programs. The general theory works perfectly here

that money matters to everybody irrespective of age, gender and class: but it matters most when

the need is acute; demand is high and the supply of materials to fulfill the needs is low. Another

respondent said:

“Would I take a loan for fun, Sir? I take loan for greed. Now I am thinking if I should

sell my home and house. I don’t understand income and expenditure. Everything seems

to be equal. I could not make any profit from loans. Just surviving somehow by eating

is the profit. I have already suffered losses after taking loans.”

Poor women’s participation in microcredit programs has not enabled them to gain as much

profit as needed to support their families. The amount of money they borrow from NGOs is

often not enough to start a good business with the likelihood of achieving positive outcomes.

Sometimes they undertake enterprises that incur losses for maintenance and operations. One of

the examples of this kind of employment initiative is CNG auto rickshaw that incurs

maintenance cost that is often huge and not easily recoverable from income. In this critical

context they once again take loans in order to keep the vehicle in operation, creating continuous

crises. A significant number of women who have been involved in microcredit programs for

more than two years have shared the opinion that microcredit did not yield any remarkable

benefits for their lives. One of the clients of Grameen Bank named Farzana (age 37) expressed

her opinion with regard to the changes in her life after joining the microcredit programs: “I

have been involved in credit programs for nearly 7 years. My life does not experience any

changes but borrowing and paying loan money back from NGOs and others. My life is bound

up with credit. I don’t understand any changes in my life.” Thus lives of many poor women are

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on the rotation of taking and repaying the credit borrowed from NGOs or from other informal69

and private sources.70

71The flow chart demonstrates that poor credit

clients are on a rotational process of borrowing and

repaying the loan. They borrow loans from NGOs

and pay for the installments by borrowing from

informal sources such as relatives, neighbors and

local moneylenders. Therefore, the supposed

income generation project does not yield any

immediate return that contributes to the wellbeing

of the family. The project takes a long time before

reaching a certain point for yielding fruitful results.

Clients have to continue taking on loans whether they reap benefits from their undertakings or

not, sometimes by substituting the repayment of the loan of one NGO by borrowing from

another one, most often without the knowledge72 of the field workers of microcredit programs.

Moreover, personal borrowing from relatives and neighbors without interest is a regular and

pervasive phenomenon. These way women borrow and repay money that do not give them any

long-term solution to the inflicting poverty. Microcredit in this regard has been a process where

poor women have been bound, keeping poverty stable for many of the clients or in some cases

exacerbating the existing situation. Thus the findings of this study coincide with that of

Jahiruddin, et al., (2011) who argue that microcredit has no significant impact on poverty

alleviation of poor women or otherwise exacerbates the situation of poverty. Borrowing and

paying back loans is a continuous process by which poor women lead their lives. They take

loans from NGOs and repay the installments from other sources in many instances. They,

therefore, are in a loan cycle which Karim (2008) coins in her innovative study on microcredit

69 Poor women tend to borrow from local money mongers for repaying the installment and satisfying immediate

needs. At the same time, they also borrow from other NGOs without the knowledge of the NGO workers.

Repayment pressure of microcredit programs has fostered cross borrowing in the program villages. 70 Private sources refer to borrowing from relatives and neighbors. When poor women face problems managing

money for repayment they try to borrow from private sources. In the context of rural society in Bangladesh the

culture of personal borrowing is a common practice irrespective of rich and poor. 71 Source: Adapted from field interview data. 72 It is reported that NGO workers most often discourage their clients from taking loans with other NGOs in fear

that it will lead them to default on their loans while juggling installments for several NGOs. NGO workers deter

their clients in the hope that they will stick to only one microcredit program. But the reality forces poor rural

women to engage in cross borrowing to meet the repayment deadline.

Figure 9: Loan cycle of credit clients

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as the micro debt. The poor women are overburdened with debt, and this according to Hulme

and Mosley (1996) lead poor households to become even poorer.

Microcredit has been turned into a labyrinth for many of the poor women, where they are

unable to escape once they have entered the process. One important quote from a respondent

named Piara Begum (age 45) of BRAC in Kazirgaon that encapsulates this argument is, “God

has created this loan [kisti] to take human beings away from the world soon. We rotate in the

cycle of debt all the year round, there is no benefit.” About 71% of respondents said that they

have joined the microcredit programs in hopes of gaining benefits, but the problems begin

thereafter because they are unable to earn the expected outcomes from using loan money. One

respondent of Grameen Bank named Nazma (age 35) spoke about her experience of

microcredit: “Borrowing loan is just a means for mere survival. It is not a sustainable solution

to the promotion of life condition. Loan does not save our lives, but helps just to survive. So,

we do not understand the profit and loss from loan.”

Poor women that are failing to mitigate their economic crises and are trying to manage other

life sustaining necessities, opt for borrowing loans from NGOs to cope with the situation.

Although primarily the credit is considered good for the progress of their lives, the ultimate

result is worst, especially for those who have no regular income or any productive business

activities as it stands. Consequently, their situation gradually becomes more vulnerable against

any exogenous shocks. This is indicative of the poor performance of microcredit used by the

unskilled and non-literate people in rural areas. I can present a relevant statement of one of the

respondents who has been involved in microcredit programs of BRAC for well over twelve

years named Mayarun (age 36). She in this case puts:

“Sir, nobody takes a loan if she does not get into trouble. Credit is grown out of crisis.

We use credit for our problems. Finding no substitute and falling into trouble, we

borrow loan. I cannot even make a profit of one taka. It increases the load on my head.

Money is exhausted as soon as we bring it in. Who else will help us? We all live on

loans. We borrow because we are compelled. This loan is no good way for the poor.

Credit has degraded our conditions instead of making it better for us.”

Almost all women have said to me that they take on loans from NGOs because of the associated

services available to their homes that no other organizations provide. Women trying to alleviate

their poverty through means of microcredit get into loan cycles and find themselves stuck in a

poverty trap. The potential danger lies in the economic relations of women with the delivery

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mechanism and management of credit by the program managers and the clients themselves.

Thus they are entangled with poverty and loans, and have no safe exit from these difficult social

and economic processes. About 78% of the respondents told me that they are continuing the

repayment of loan, and have just been surviving somehow on credit with no remarkable gain

but rather, pain. This is actually the picture of rural poor women who have found microcredit

to be a new way to overcome their economic problems, but which thereafter overturns into an

‘economy of burden and risk’73 for a substantial number of female borrowers in rural

Bangladesh.

9.4. Loan Use and Management: Who supervise?

From field level observation and interview reports, it is revealed that there exists a large gap

between the commitment and use of loan money by the poor women. In the majority of cases

it has been found that clients’ promises to the program officers about the utilization of loan

money when borrowing the loan is starkly different from what they actually do in the practical

field. Female borrowers in this regard have been dealing strategically with the field level

officers at the time of borrowing for the reason that prior to offering loans to poor women,

NGOs admittedly look for reasonable grounds to disburse the loan that in actual fact is meant

for income generation activities undertaken by women. As women in the rural society of

Bangladesh are beset with multiple problems embedded in certain socio-religious and cultural

circumstances, they utilize various coping strategies to face these problems.

Moreover, poverty is a long-term problem with no short-term solutions. Women in poverty

naturally cannot think of future prospects other than satisfying their immediate needs. In these

circumstances what they are seeking is an easy and immediate solution to their problems

underlying in the social and economic structure of the society, and find the best palliatives of

microcredit given that it has been easily accessible to them since there seems to have no other

public finance and service delivery schemes in the rural structure of Bangladesh, particularly

in my study areas.

A significant portion of women that take loans in this rural structure live in severe destitution,

subordination and vulnerability. As a result, they adopt mechanisms that can at best alleviate

their hardships and miseries. They consider and choose to borrow loans from NGOs in order

73 Most of the poor women find repayment pressure an economic burden and pass through hardships and

difficulties for facing continuous economic crises. When they borrow loans from different sources to pay up the

initial debt they get into further financial trouble, increasing their social vulnerability

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to overcome immediate financial difficulties they face in their lives. Credit is the crucial and

core issue in the lives of these women, and has also become a godsend to most of the poor

women who do not have good substitutes to formal credit other than NGO-credit.

Table 9.4.1: The amount of loan borrowed by women clients in the last three years74

Poor women’s income

group

No. of clients (%)

Individual average loan borrowed in last

three years (BD Tk.)

Upper income 11 (22) 54,728

Middle income 16 (33) 25,938

Lower income 22 (45) 12,955

Total 49 (100%) -

Source: Adapted from field interview data

From the above table it is observed that 22% of upper income poor borrowed tk.54, 728 on

average individually for the last three years, while the amount of borrowing was tk. 25, 938 for

the middle income poor whereas the amount of individual average of loan was 12,955 for the

lower income poor. Moreover, it is found in the study villages that poor women have used

loans for multifarious purposes that include productive and nonproductive activities.

75The bar chart (figure 10) shows that the different groups of poor women used their loan

money to meet their differing needs. It indicates that around 64% of upper income poor women

used loans for productive purposes, while about 36% of the same group of women used it for

nonbusiness activities. For the middle-income group, approximately 56% used credit money

for income generation activities and about 44% of them for noneconomic function. Similarly,

nearly 46% of the lower income group utilized the loan for productive purposes whereas about

54% of them used it for nonproductive activities.

74 The information given by the respondents regarding the amount of loan borrowed from NGOs is from the last

three years, as many of the respondents could provide the information of more than three years. 75 Source: Adapted from field interview data.

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When credit is used for non-

economic activities, it does not

yield remarkable benefits for the

poor households in terms of

poverty alleviation and protection

of exposure to vulnerability. A

host of sectors have been

identified, though they are not

prevalent in terms of duration,

frequency and sustainability of the

work, whereby loan money has

used by the women and their

family members in the study villages for productive income generation activities. The activities

that suit the productive effort of the poor include the purchasing, repairing, and leasing of CNG

auto rickshaws, buying sewing machines, purchasing cows and goats, venturing into small

businesses, running a motor workshop, furniture and carpentry, agricultural activities, grocery

or provision stores, vegetable vending etc. Noneconomic and unproductive activities include

paying back informal loans borrowed from neighbors, relatives, or even from informal

moneylenders, bearing the marriage expenses of daughters (including providing dowries),

household consumptions, bribes76 to resolve land disputes, paying back loan incurred by

husband before his marriage, medical treatment for family members, helping relatives go

abroad, building and repairing of houses, purchasing corrugated tin (for rooftops) and sinking

tube wells in the home (for safe drinking water). These are some sectors that cover the realm

of loan used by the clients, which indicates that most women borrowed loans for meeting

immediate needs regardless of future consequences. The lack of monitoring or evaluation of

the so-called income generation activities by NGO workers indicates that the organizational

commitment to oversee the successful implementation of credit-driven initiatives undertaken

by the poor women remains rather distant from the reality, which, in many instances, ultimately

ended in unsuccessful project.

76 It was found in Kazirgaon village that one of the respondents named Lalbibi borrowed tk. 30,000 from BRAC

to bribe a local leader to settle the dispute over her homestead land. It should be noted that no other respondents

from Kazirgaon and Chatal reported of such incidents.

0%

10%

20%

30%

40%

50%

60%

70%

Upper income Middle income Lower income

Loan use by different income groups

Productive Nonprodcutive

Figure 10: Loan use by different income groups

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In a sex-segregated and highly labor differentiated society, women are supposed to carry out

activities within the boundary of the homestead such as poultry raising, vegetable cultivation,

making handicraft, embroidering quilt, making garments with sewing machines, animal

husbandry within the periphery of home, and any other skills of similar variety that potentially

accrues economic benefits to their households. However, most of the work agreed to be

undertaken with credit falls under the realm of men’s work, which is usually more laborious

and cumbersome compared to ones performed by women. For example, the responsibility of

driving a CNG auto rickshaw or a leg paddled three-wheeler (which is popularly known as

rickshaw), cow-goat rearing and cattle grazing rest with men; fellow members in the society

are less likely to accept a woman engaging in such activities.

However, the issue of the proper utilization of loan money has not been taken into account by

microcredit programs per se, in many instances turning a blind eye to what women do with the

loan instead. When asked whether they note the type of activities or enterprises undertaken by

the poor women, both Grameen Bank and BRAC field officials said that at the very beginning

of the loan-suitability process they already ask the clients what the loan money is intended for

during the house visits. After the disbursement of loans, however, they do not follow up with

how the loan money is used, which in this sphere indicates that offering and recovering loans

to and from the poor clients is the first and foremost responsibility of the local field staff,

regardless of whether the clients are benefitting from joining the programs. Consequently, the

alleviation of poverty of the rural poor women through the so-called income generation

microcredit projects remains an unfulfilled promise due largely to the improper management

and sheer lack of supervision by the NGO authorities.

9.5. Market Saturation and Low Return Investment

It has already been explained that most of the loan money is either not properly used for income

earning activities or is invested in low-return businesses. There exists the potential danger of

clients falling into crisis in future if there is no return of profit relative to the investment. This

is one of the explanations for the poor performance of credit, while other possibilities remain

in the misuse of loan by the clients. Furthermore, the poor client women are at best semi-skilled

workers, and are therefore rarely able to do any production-oriented activity that could return

more output as opposed to the money invested. As a result, they end up selecting the kind of

activities that suits their limited skillsets, which means that effectively poor women who are

simply the entrepreneurs of such businesses only in name, not in practice. At the same time,

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when many people in the same community engage in similar forms of business or activities of

this sort, there develops market saturation and therefore plummeting the level of profit. For

example, it is seen in one of the study villages where a good number of Grameen clients’

husbands have been trading fish in the same locality, leaving some other traders in a difficult

situation due to oversupply of fish relative to the demands to the local people. Hume (2000)

terms microcredit as micro-debt and argues that micro-debt does not produce favorable results

for poor people working in low-return activities in poorly developed but saturated markets.

Only an insignificant number of the borrowers (about 12%) used their money in farming

activities and buying cows. Activities of such type takes a long time to gain profits, and

contributes nothing to alleviating of the current crisis. In this practical situation women become

more vulnerable to various kinds of potential problems, further aggravating their economic and

social conditions. The repayment also begins immediately after sanctioning the loan, in which

case women have to pay the installment from the loan money per se. The loan recovery system

of NGOs has put serious pressure on them to continue repaying the installments within the

stipulated deadline, which means that ever so often, poor women are unable to earn sufficient

amounts of money from the various activities they engage in to repay the loan on time.

Moreover, women under the study are of the opinion that when money is given reasonably in

a big amount the potential output from investing this is expected to be far more than a small

amount. The reason is because the small amount of money gets drained rapidly due to day-to-

day expenditures even before it can be invested into productive enterprises that could guard

against instances of financial crisis and food shortage. A respondent named Nazma (age 35) of

Grameen Bank said, “Lesser amounts of capital cannot garner significant output.” Many

women have complained that it is not possible to do business with small amount of money

from NGOs, and not even possible to make a profit from it. Rumena Begum (age 29) of

Grameen also said as follows:

“There is no benefit from petty businesses. It incurs a huge loss. I have to repay the

loans and I end up sustaining severe hardship. My husband has no job. I have paid the

loan for five months by borrowing from others. I have increased my burden instead of

earning money through credit. It so happened that some valuable things of my marriage

have been sold off in order to repay the loan.”

A marginal amount of money is not sufficient to initiate sustainable business ventures that may

ensure a minimum income for a poor family. Many respondent women have said that investing

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money in high yielding activities is far more effective in gaining economic returns compared

to using it for satisfying immediate family needs or to finance other low return businesses. It

is found that if the money borrowed from the NGOs is invested in income earning employment,

for example, hiring and driving CNG auto rickshaw, it could provide some family income.

This type of daily wage earning activities has the potential to contribute to regular income

(provided that the person operating this vehicle actually goes to work!). Since this sort of

enterprise requires a reasonable amount of capital, which not every household can manage to

start such projects due to the limited amount of credit. Moreover, investing money in a low

return business cannot create economies of scale for the poor because business with a small

amount of capital cannot yield good returns for its investors Therefore, money cannot turn into

commodity because the loan money is used for petty businesses instead of it functioning as

rational capital in a continuous productive processes, rather it has been used as an immediate

solution to reduce the hardship and poverty of the rural poor.

9.6. Reduction of Poverty and Vulnerability: Microcredit is a Means?

The core objective of this sub-section is to delineate whether poor women’s participation in

minimalist microcredit programs has contributed to the reduction of their poverty and

vulnerability. The extent to which poor women have been able to achieve the beneficial

outcomes after joining the microcredit programs calls for an explanation.

9.6.1. Income, Savings and Economic Crisis

Economy is the backbone of individuals and households, and is crucial for the advancement of

a society. My findings indicate that when poor women fall into economic crises they try to

manage the situation by borrowing money from other persons in the neighborhood or from

NGOs to apply for a loan. People in the neighborhood help others who are facing financial

crises. They satisfy their current needs taking money from them. Savings is deemed difficult

where necessity dominates every aspect of their lives. Poor women are not in a position to keep

a savings fund but what they conceive as the savings is the collection of money for making the

repayment of loan. Nearly all of my respondents have said they have no savings, although they

have the desire to save. They have aspirations and hopes to save money for safeguarding their

future. One respondent woman named Kadrunnesa shares: “The poor cannot save money. We

live from hand to mouth. Our struggle is to save our lives from destitution, not to save money.”

The experiences of the female credit clients indicate that saving money is more than a myth

for the poor. The question of savings becomes relevant only when the level of income is up to

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certain point to meet their basic needs. If the poor households have a regular income, they can

at least manage to save a bare-minimum amount to meet future crises such as food shortages.

But the practical situation of the poor women is different from what has been portrayed in

public attention (Pitt & Khandker, 1998; Khandker, 2005; Mahjaben, 2008; Khandker &

Samad, 2013). The underlying reason for the inability of many of the poor families to save

money is due to the dearth of income-generating activities undertaking by them because loan

money has been used for consumption and for other non-economic purposes, and yet timely

repayment is strictly observed and enforced by microcredit NGOs. Therefore, the misallocation

of loan money by the borrowers together with the stringent discipline of repayment has reduced

the potential of poor women in raising their income levels and being able to save money

(Chavan & Ramakumar, 2002). Moreover, small amounts of loan money often cannot generate

considerable amounts of income. As a result, they have spent loan money on activities that

most often do not produce any remarkable financial outcomes for the households, creating

confusion about the potential of credit driven undertaking which in turn leads most of the

clients to be crestfallen, reducing the possibilities of generating income to pay loan, and

improving regular saving practices. Thus their level of poverty remains constant or worsens,

causing serious incapability to cope with vulnerability during periods of economic hardship. I

asked my respondents these questions: How do you save money for the future? How do you

repay the installments while experiencing continuous economic crises? Shiri Begum (age 36)

of BRAC illuminates:

“I pay installments of tk. 4200 per month. By savings I mean the collection of money

in hand for the repayment of loans. Savings is what my husband gives me from his

earnings. This savings is made only for the payment of installment. I save money by

cutting down on the intake of daily meals. I buy clothes for my children with tk. 200

instead of tk. 1000 so that some money can be saved for repaying the loan. Nothing is

saved for future. What is future of the poor?”

I asked my respondents what they do if they cannot manage to save the amount of money for

the installment. Most of them explained that they mostly borrow money from informal

moneylenders at high interest, though as mentioned earlier the prevalence of informal money

dealers has dwindled somewhat due to the appearance of NGOs. One of the respondents of

BRAC named Swapna (age 31) adds:

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“I took loans from Grameen Bank to buy cows for tilling the land. We have no land of

our own. So I bought cows to cultivate others’ land. I have bare minimum earnings. I

am just surviving anyhow. I cannot save money. What I save is meant for paying up

the loan.”

Most of the respondents have shared with me their inability to save money for future protection

because they are always fighting dire poverty. “Saving money is nothing but a nightmare”, said

one of the clients of BRAC. The conceptual meaning of savings has narrowed for poor women:

they believe that “savings” simply refers to collecting money for the installment-repayments.

One respondent has said, “Household [shangsher] means stomach which is difficult to fill. We

have to pay the loan in spite of keeping the stomach empty. How can we save?” In this context

poor women never think of savings so long as they live from hand to mouth. The perception

of savings to almost every woman under the study areas indicates that the savings are made

only for paying up loans. It does not necessarily mean that they save money from their incomes;

rather they most often keep money in hands for the repayment from sources beyond the

earnings. However, microcredit programs in this regard have at least successfully produced

savings norms among the poor women in order to have the guarantee of loan.

9.6.2. Food Insecurity and Coping Strategies

It is found in the program villages that during food shortages poor women go to other neighbors

to request for foodstuff such as rice, pulse, potato, onion, and garlic – essential items for

preparing meals. In rural society, poor people are especially predisposed to sharing life-

sustaining necessities. Usually in the rural areas, neighbors and relatives offer their assistance

to people of the village, especially when they are in want of anything. This is very common in

rural areas, though this is less apparent in the highly individualistic and rational metropolitan

areas. Moreover, most poor people buy food and other necessary foodstuff from the local

groceries on credit. Most critical situations arise when a family member falls ill and cannot see

the doctor due to a lack of money, falling short of their regular income. In this situation,

borrowing credit from NGOs is considered the best way to tackle the immediate shortage of

cash. While on the one hand, it is evident in a significant number of cases that poor women

substitute nutrition enriched food such as meat, eggs, fish, and milk for various low calorie

items because they struggle to afford them. On the other hand, low-priced food items such as

leafy vegetables, palm kin leaf, vegetable cultivated in their own piece of land, and dry fish

are added to the daily food chart.

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The quality of food is subject to change only when household incomes increase, which is a rare

event in the context of the lower-income poor. The situation turns severe for households where

the husband is the sole breadwinner. It is often found that women who have both a husband

and a working son in the family enjoy relatively good standard of living compared to women

who only have one breadwinner in the family. Families with a large number of dependents

tend to be far more poor and vulnerable. Women who are the head of the household with non-

working husbands’ are the most needy, as they have to bear the brunt of both loan-repayments

and family expenditures. The statement of one respondent named Nehar Begum (41) of

Grameen aptly explains:

“We have limited income. It is difficult to manage food according to need. During the

rainy season, it becomes even more difficult. Now it is rainy days. My husband has no

work. We buy food to eat from the local shop on credit. We clear off the dues in the

shop when it becomes huge by taking loans from NGOs.”

It is found in a considerable number of cases that poor households cut down their expenses on

food items by forgoing daily meals or removing necessary food items from their diet. I asked

the respondents: How do you repay the loan if you do not save money? One respondent named

Rayhana of Grameen Bank replied, “Loan is paid out of whatever my sons earn from daily

laboring.” I probed further and asked what she would do if she had not been able to secure a

loan. In her reply she has said, “If there had not been any loan, we could eat fish and

vegetables”. Many poor households remain in dire straits due to persistent poverty associated

with the paucity of income in a particular period of time in the year, especially in the rainy

season. As a result, their meager income derived from daily wages plummets below the

minimum, rendering them in an even more vulnerable situation. It has been shown that poor

households to adopt various strategies in order to cope by reducing the expenses on food cost,

eating seasonal vegetable as food, borrowing loans from neighbors and NGOs. During the

rainy season, they grow leafy vegetables in the homestead so that they can take this as food.

One respondent named Nazma (age 35) was asked: say, you have tk. 500 and you either have

to repay the loan from here or buy food. What would you do now? She said, “It is better to

repay the loan. Not better to shop. There is no rice in the house. Yet, we will not spend the loan

money.” The priority of all women is to pay the installment on time, to the point of forgoing

the daily intake of meals. Another respondent named Dilara of Grameen Bank spoke about her

coping strategies during food shortages:

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“I reduce the amount of meals I eat so as to repay the loan money. I cannot save money

and store food. We just live from hand to mouth; income and expenditure remains the

same. Sometimes expenditure is higher than the income as we borrow from others to

satisfy our needs. The stomach does not understand our problems.”

NGOs in this connection have become a convenient source of credit that women use in order

to satisfy their immediate needs, but in the long run this strategy is not beneficial mainly due

to the misallocations of loan money. As a consequence, most often they fail to manage proper

diet, and in some cases they even cut down the amount of meals in order to offset the food

shortage. One respondent named Rayhana (age 35) of Grameen has told me of her survival

strategies during food crises:

“We wanted to eat fresh fish but ate dry fish [shutki] instead; eat rice with salt instead

of vegetable. Poor people have no life. They are dead in spite of having life. Always

remain dead, but nobody comes to bury. Sometimes it happens that I could not manage

food in time. We take breakfast in lunch time and lunch at dinnertime to offset food

shortage. Eating on time rarely happens in our lives.”

It is evident that women in the higher income groups generally have not reported experiencing

any severe food crisis, but one problem they have encountered is the inability to afford vitamin-

rich food because of the variation of income at different times. If the income of the main

breadwinner is regular and stable, they are able to provide themselves and their children with

3 proper meals as per need. Moreover, some respondents in these income categories have

experienced difficulties during the slack season, when gainful economic activities are less

readily available compared to peak season. In this case they tend to become more vulnerable

to poverty and social insecurity, and many end up seeking loans from NGOs and also from

other relatives or neighbors to salvage the situation.

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77The scheme shows the coping

mechanism of the poor women for food

consumption and repayment of loan. They

buy food from local grocers on credit, and

in many cases they borrow money from

both NGOs and informal sources such as

moneylenders or relatives to pay back the

dues to the groceries.

9.6.3. Asset Building

It is learnt from the poor women that they have borrowed loan mostly for meeting immediate

crises. Approximately 23 out of 49 of the respondent women have not used the loan money for

income generation projects, while about 26 of them have invested money in petty businesses.

Spending money on non-income generation activities does not yield any return, while investing

money in small enterprises has little potential to return significant profit. Therefore, they were

not able to earn sufficient money to be able to save the profits or build any assets through the

micro investment. One of the main reasons lies behind the fact that the amount of loan invested

for income generation is not significant enough to generate capital or assets after deducting

household expenses. Most of my respondents regardless of their income category expressed

the same opinion about building assets from credit-driven activities. Yasmin, aged 35, of

Grameen Bank said as follows:

“Borrowing and paying loans back is the greatest asset. There is no scope to increase

any other assets. What we get from credit goes to the NGOs as installments. We had

no better sources to borrow money before joining the programs. Now we can borrow

money. This is our benefit.”

One of my respondents named Kadrunnesa (age 43) of Grameen Bank shared her opinion with

regard to building assets with the profit from microcredit: “We borrow loans to satisfy our

consumption, bearing the cost for medical treatment and for personal expenditures. How can

we make profit and build asset?” Almost all women who were identified as the lower and

middle income groups have not been able to build any assets from their activities. This is

77 Source: Adapted from field interview data.

Figure 11: Coping mechanism of credit clients

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because about 44% of the clients of middle income categories and 54% of the clients from

lower income group used loans for non-income purposes, while nearly 56% of the middle

income ceiling and 46% of the lower income categories invested their money in different low

return income earning activities which yielded no considerable outputs. It was nonetheless

observed that certain households with more than one income source could afford basic

household appliances, low priced furniture such as wooden hangers for putting clothes,

wooden cots and a few chairs. Some of the women belonging to this status group also claimed

that majority of the items available in the houses were bought with other familial income that

does not necessarily have to do with the profit from microcredit. They can rarely afford to

purchase some of their favorite items like gold necklaces, earrings, nose pins and other luxury

goods for the households with the profits from microcredit driven enterprises. Needless to say,

purchasing land with the profits of microcredit initiatives is completely out of the picture.

9.6.4. Children Education

There are arguments that microcredit has increased the income and earning capacity of the

poor women, and therefore, raised their status in the family and society. Women’s involvement

in microcredit programs has enhanced their ability to contribute to aggregate family income,

ensuring the wellbeing of the family, particularly the children. As a result, they have advantage

of educating their children, which would be a form of their future protection in kind of human

capital. This way the poverty and vulnerability of poor women would be checked and

minimized. The study findings suggest that a majority of poor women are not able to send their

children to school, even though the education at primarily level is provided free of charge

courtesy of the government. A remarkable number of children are reported to have gone to

school only occasionally on account of harmonizing the family labor with the school hours,

while at the same time their parents are not even so sincere to motivate them for schooling

since they need all the help they can get. Most school-aged children have been seen working

with their fathers to generate additional income for the family. Microcredit programs in this

case have not been influential in creating substantial awareness among the poor people about

the necessity of education and to prevent school-going children from dropping out. The

findings of this study are therefore opposed to Pitt and Khandker (1998) who maintain that

microcredit encourages poor children to attend formal schooling due to poverty being

alleviated and increased family income and savings.

The rate of children dropping out of school has a direct positive link with the microcredit and

income generation projects. A significant number of respondents mostly belonging to the

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lower-income group maintained that children stopped going to school due to pressure over

credit-installments. Children from the poor family were engaged in activities of the family

together with the father or elder brother who are in the employment of various forms. When

male children have gone to school, girl children have to help their mothers with household

chores. This demonstrates how gender inequality is already being produced and reproduced at

an early stage, which is not uncommon in poor family.

In many cases the children of the poor clients have not been able to cross the boundary of

primary school. Some of them completed their primary education, but many struggle to finish

it. From the experiences of the poor credit clients, the claim made by the managers of

microcredit regarding the contribution of credit to the facilitation, enhancement and

encouragement of education among poor family empirically proves to be vastly exaggerated.

In this practical situation the quote from a Nehar Begum of Grameen Bank is poignant:

“I stopped education of my one daughter and one son out of necessity. I have hopes

and dreams like other people that my children will be educated and take up a good job

in future. We have no such ability to educate our children. We surrender our lives to

need and relinquish our hopes. Our dreams will never materialize. Need and necessity

will not leave us. So hope will remain as merely hope forever.”

A considerable number of the poor women have surrendered their aspirations to the harsh reality

of poverty, and could not educate the children despite having a deep appreciation for the value

of education. The reality forces them to refrain from sending their children to school so as to

engage them in productive income-generating activities for the family. One of the respondents

named Achia Khatun (age 45) of Grameen said regarding her children’s education, “Two of my

children read before, now one. I have to pay money for many installments [kisties]. I stopped

my daughter Marufa’s study due to that reason. I could not get her admitted into class six. Now

she is not going to school.”

Another respondents from Grameen Bank named Gulecha Begum (age 35) added: “I could not

educate my son due to poverty. I got my son illiterate in my own hand. I took loans to buy a

cow. He [son] is grazing the cow in the field. When it will gets fattened I will sell it to clear off

the loan.”

There are other incidences of such kind to support the fact that women involved in microcredit

programs could not manage to educate their children due to their chronic poverty. Microcredit

in this case has not enabled those families to provide basic education to their children. Nazma

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Khatun (age 35), one of my respondents of BRAC has said about her sorrow for not being able

to educate her daughter:

“I married off my daughter early due to want. If she had not been married, she would

continue her studies. One member of the family has now been cut back. She will eat

good food, put on good clothes in her husband’s house. She has to undergo hardships

if she were to live with us. At least let my daughter be happy.”

The statement of the respondent indicates that chronic poverty and persistent crisis force the

poor people to stop education of their children and even in some cases they get their daughters

married off earlier than usual in order to cope with the poverty. Although in Bangladesh early

marriage is discouraged and child marriage is prohibited by state law, among the poorer

sections the practice of marriage is prevalent due to poverty and other social vulnerabilities.

Microcredit in this sphere has not sparked enough awareness about the negative impact of early

marriages.

9.6.5. Health Care

The rural people in my study areas have reported to use slab latrines and soap after using the

toilet. They learnt it from the health workers of NGOs78 who have encouraged and made them

aware about the benefits of cleanliness. Even in the Eighteen Decisions79 of BRAC has written

about various awareness raising rules including the one of being clean and tidy but they are

not effective due to ignoring the aspect by the NGO workers. A vast majority of the

respondents have reported that they are not focusing their attention on this issue. Some senior

members of the programs have said that at the beginning of the programs NGO workers talked

about health and related issues, but nowadays they do not say anything about it80. They go to

a doctor when they fall sick. But in majority of the cases they go to the local medicine shop to

take medicine from the shoppers who are not trained in any field of medicine and not even

know anything about the side effects of different medicines when applied on the human body.

78 There are some family-planning NGOs that work with the reproductive health of rural women. They encourage

them to have healthy lifestyle. These NGOs are not in the village, remaining in the city instead. 79 BRAC has Eighteen Principles that the clients have to maintain for the repayment of the loan. One of them

encourages people to be clean and tidy, and is aimed at raising health awareness among the clients. 80 NGO workers confirmed that when they offer a program they discuss the issue to raise awareness among the

rural people. BRAC also has health and education programs but they are not the part of microcredit programs,

while Grameen does not have any programs of this kind.

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Sometimes it happens that they go to the quack seeking treatment for minor ailments such as

fever, cold, cough, skin problems, headache, blood pressure, gastric and the like. Even the

respondents in the middle- or upper-income groups are unable to bear the expenses for

treatment at private hospitals because of the exorbitant consultancy fees and huge diagnostic

bills. On the other hand, in the case of chronic diseases they prefer to go to government hospital

in the city, but the poorest women cannot afford to visit the public hospital located in the city,

let alone going to private hospital. Poor women typically end up going to the local dispensary

for medication due to their inability to see a consultant doctor in the city and even sometimes

cannot go to the government hospital for the same reasons. One of my respondents named

Howa (age 60) of BRAC describes the story of her nephew’s treatment in the following way:

“Once my nephew was very sick. I took him to the doctor. He was not recovering. I

was running around. I go to Osmani [a government hospital] again. Doctor says that it

will require a lot of money. We get into trouble. I take money from various sources to

treat my nephew. We come back home after the operation of my nephew. I borrow

loans from the NGO to pay back the money that I took from others. I also borrow loans

by way of my daughter and daughter-in-law. Then I repay every body’s money. I pay

the money for installment despite remaining unfed.”

The story is the evidence of the inability of the poor households to treat their family members

and themselves when falling sick. Therefore, seeking treatment for any chronic diseases is

problematic for many poor households. If they ever seek any treatment for curing the diseases

they have no substitute to borrowing loan from NGOs. When they fall in any critical diseases

they, therefore, become more vulnerable to tackle the chronic health conditions.

9.6.6. Living Condition and Quality of Settlement

Housing settlements in the rural setting in Bangladesh is different from that of the city. Almost

all houses are built with wood and bamboo, with a corrugated tin rooftop and an earthen floor

– although some people having good financial ability live in houses made of brick. There may

also remain some other variations of the features of the houses in different regions. Only a few

people can afford to construct a brick house because construction materials are too expensive.

The same situation is true for my study areas, whereby almost all respondents live in earthen

tin-shed houses surrounded by a bamboo fence. In a limited number of cases (some of the higher

and middle income groups), there were houses with brick walls and unpaved floor. Some of the

clients have reported that they have built their houses by combining their own savings with a

loan from the NGOs.

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Many of the poor live in unpaved tin-shed houses and in appalling conditions with the lack of

necessary sanitary facilities. There is a dearth of sufficient items like furniture and cots for

sleeping. In most of the houses, housemates live huddled together with the same-sexed family

members in one cot81. The inside of the houses are damp and dark due to insufficient light

entering the houses. In spite of that those people have become accustomed to living in such

grimy conditions, as they have no better alternatives. There is no electricity in some houses,

even though the supply of electricity services is available in the area.

The physical condition of the houses becomes extremely squalid during the rainy season, when

the sufferings of the people is more pronounced than any other time of the year. Winter is a no

less painful situation for them due to the continuous chill in the houses caused by wind piercing

through the perforations of the bamboo-fenced wall. They sometimes experience devastating

destruction left by the natural disasters like floods and storms damaging the houses and blowing

away the rooftops. In this grave condition, they borrow loans from NGOs to repair and

reconstruct the houses when they are not able to manage with their own meager cash capital. In

this case borrowing credit from NGOs is supposedly an innovative solution developed by the

NGOs to provide current solution to woes of the poor. Women are often given loans for the

construction of their house, which offer no direct monetary returns, forcing many of them to

experience a huge burden of loans later. Therefore, the shock-bearing capacity of the poor

women in such situations appears to be very limited, possibly leaving them more vulnerable to

tackle the crises.

However, the best outcome of credit is manifested in the smoothing of consumption of the

middle income and higher income groups of the poor, while the situation of the lower income

group remains critical. Both middle and lower income groups are susceptible to social and

economic vulnerability at any critical juncture. Moreover, the food consumption of those

groups is ensured at the expense of huge load of work and loan, which is just one of the many

dimensions of poverty. So the impact of credit is partial and minimal to the alleviation of

poverty (Murdoch, 1998), depending on the current occupational and employment status of the

clients and the nature of the investment of credit. In many cases credit has not been very

81 Particularly in the rural areas several people sleep in the same bed depending on the number of family members.

Privacy of the individual in this case is not properly maintained due to limited space and number of beds. Bed

sharing is therefore a commonplace phenomenon, especially among the poorer classes.

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effective for the very poor class, among them women are the biggest losers despite being the

nominal beneficiaries of microcredit programs.

The overall analysis reveals that the effects of credit on the alleviation of poverty is more

discernible on the group of women who already possess their own asset base, financial back

up, income earning capacity of male person in the households, and some cash money at hand,

which in addition to credit has the potential to contribute to the gross family income, and thus

help build asset base for the households and increase the shock bearing capability in any dire

situation. Credit alone cannot alleviate poverty or reduce the level of vulnerability of poor

women given the fact that most of the poor families could not use credit properly due to severe

economic crises that compel them to spend credit money for satisfying immediate needs.

Besides, poor clients have no proper education and skills to operate any business that requires

technical knowledge and competence, which in association with their continuous economic

crises contributes to further falling into poverty and vulnerability. However, microcredit is

found to have been effective only when the loan money is invested in productive activities in

addition to the existing asset base and cash capital in the hands of the poor clients.

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CHAPTER 10

Conclusion

Microcredit is largely regarded as an appropriate instrument for the development of poor people

by integrating them in income-generating activities, and credit is increasingly becoming a

crucial institution for the rural poor in developing economies (Chavan & Ramakumar, 2002)

like Bangladesh. This study reveals that in the practices of development for the poor,

harnessing social capital generated by poor women themselves has proven to be a shrewd

strategy for safeguarding the financial imperatives of both Grameen Bank and BRAC. The

power and potential of credit to bring poor women into the arena of formal markets is

remarkable given the fact that they had no prior access to the money market. Microcredit in

this regard acts as an entry route for poor women into capital market and credit practices. The

most attractive strategy of microcredit programs is the group lending process, introduced and

styled primarily by Grameen Bank and replicated by other NGOs like BRAC has been a

governmental strategy for securing the success and sustainability of the programs.

Moreover, microcredit programs prefer offering loans to groups of self-selected poor clients,

as this ensures a constant flow of interaction and surveillance. This is the perverse form of

“social capital” that is engendered in the reality of poor rural women by microcredit programs,

and this works in the financial interests of NGOs as it minimizes the risk of defaults by shifting

the onus and responsibilities of repayment onto the shoulders of poor women, thereby ensuring

highest economic pay off at the expense of the joint liability of poor women. The self-selection

process for the delivery of loans by NGOs, on the one hand, has fashioned a new dimension of

social interactions in the form of conflicts centering on the scheduled repayment rituals, while

on the other hand, producing norms of cooperation amongst the poor clients. The main focus

of microcredit programs is therefore on the timely recovery of loans in which a group functions

as a safeguard for reducing the transactional costs of the NGOs.

The study also indicates that microcredit programs could not produce meeting norms, and

hence appears to have failed to significantly develop the sense of solidarity amongst the clients

that could contribute to the development of the poor community in a collective and sustainable

manner. Besides, microcredit programs have used the network of women to ensure that

information about on-time repayment is disseminated and reinforced, instead of using such

social links to spread educational messages that might help empower these women. This one-

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dimensional use of the networks has failed to achieve the optimal economic outcomes for the

poor because it has not been able to overcome the information asymmetry that continues to

exist. Likewise, microcredit has developed patron-client relationships at both the vertical and

horizontal levels – in which NGO workers act as patrons and the poor women become their

clients. The study also reveals that the self-selection processes, coupled with biased NGO

preferences, ensure that the poorest of the poor women end up being intentionally or

unintentionally excluded from the programs. This in turn reinforces the existing social

inequality rather than leveling the class and gender based social disparity in the rural social

structure. Microcredit has therefore failed to challenge the existing social inequality, and rather

has fostered the process along class and gender line.

The most powerful strategy applied by the microcredit programs for the recovery of loans from

the poor clients is through the disciplinary technologies of power. Microcredit programs bind

all poor clients into NGO-discipline for the recovery of loans by the clients through the rigid

policy for repayment. The findings of the study confirm that NGOs force clients to comply

with the norms of the organizations that prioritize the financial sustainability of the programs

at the physical and psychological expense of the clients. Most often, NGOs coerce the clients

for loan repayments, and disregard the problems of the borrowers since their target is to

maximize the economic portfolio of the NGOs, for which they impose program discipline on

the clients and bind them into NGO mandate. The disciplinary technologies of power have been

very effective for the successful recovery of loans from the poor clients as such techniques are

supposedly much more actionable on the female clients because women are more amenable to

discipline. The study also demonstrates that microcredit programs oblige the clients to deposit

money as a necessary condition for borrowing loans, which functions as a security and

disciplinary measure adopted by NGOs. It also shows that NGOs play a coercive role when

recovering payment from clients, and they have been known to seize properties from the

clients’ possession in the event of their failure to maintain timely repayment.

Through the operation and management of microcredit, NGOs have produced particular norms

that have brought success for the programs in terms of coverage and profit maximization by

ensnaring the poor women into formal credit practices and obliging them to comply with

institutional rules and regulations. Women’s sense of honor and shame has also been

capitalized upon by the NGOs as a form of discipline as they are the traditional custodians of

familial prestige and are typically socially and culturally submissive. Therefore, microcredit as

a neoliberal development intervention tool has created women as social subjects and instilled

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the norms of discipline into them so that they can make regular repayments and manage their

own development by entering the formal credit market.

Given the fact that microcredit programs do not offer loans to temporary residents or tenants.

Group-lending and the permanent residential status of the clients functions as a form of

surveillance for monitoring clients in the repayment processes and their subsequent financial

behavior. A group is a strategy that acts as the eye of the NGO authority to observe whether

clients are paying their installment regularly. Likewise, every client has to maintain a savings

and deposit book for borrowing and paying loans, which is testament to the clients’ regularity

in the repayment of loan. This way the entire process of loan-recovery is designed to serve the

commercial interest of the programs. In cases of failure to comply with NGO rules and

regulations, the clients forced to drop out from the programs, although there are also rewards

for good performance in the repayment of loans.

In the rural social structure there is no competing economy in a formal shape aside from NGOs.

As a result, they have been able to reach the doorstep of poor people with their service delivery,

which is something that no other public organization has been able to provide in their own

capacity. NGOs are now found to have been an active advocate for change in poor people’s

life with their service delivery to fulfill the immediate needs and demands of the poor by

providing them with the facilities of credit. The success of NGOs in this regard lies in the fact

that poor women have previously had no access to the formal credit market can now access

these services. Women who were once housewives have become entrepreneurs and consumers

of capitalist products like credit for managing their self-development. NGOs in this connection

are in a privileged position to harness the problems of the poor to serve their commercial

interests by expanding the reach and frequency of the service delivery even in the far-flung

region of the untapped and remote rural areas. This way microcredit as a political tool of

neoliberal development has reached even the grassroots level in Bangladesh by synchronizing

the needs and demands of the poor with that of the economic interests of the programs, thereby

increasing the economic portfolio of the NGOs at the expense of the poor.

NGOs take the advantage of the poverty of the poor because no other formal financial

organizations are available in the village. Before, informal moneylenders prevailed in the

village; now, NGOs have encroached onto the space of these informal practices, although the

former system continues to operate in the background to a smaller extent. Microcredit programs

provide their services going to the doorstep of the clients whereas informal money lending in

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the context of rural social structure is not positively seen by the members of the society. The

main strength of NGOs in this regard is the acceptance of the programs by people and their

convenient and discreet service delivery.

The study reveals that microcredit programs charge interest against the loan that is more than

the commercial rate even though most clients are unaware how much more interest they have

to pay to the NGOs. Most do not even possess basic accounting knowledge that could help

them find out the rate of interest they actually pay. At the same time, NGOs offer nominal

amounts of interest against the savings and deposit made by clients, which again points to the

commercial orientation and profit-seeking motive of NGOs. Furthermore, the managers of

microcredit programs go as far as to control the movement and consumption patterns of their

clients to make sure they are able to budget their money accordingly and make full and timely

installment-repayments. Similarly, NGOs govern clients by selling them mobile phones in

order to check on their whereabouts and their repayment statuses. Every action adopted by

microcredit programs is intended for the financial security of the programs, and profit from the

investment at commercial rates. Likewise, NGOs adopt different strategies for the survival of

their programs in the rural social structure in order to compete with other rival NGOs working

in the village with similar programs. One recent and attractive credit strategy adopted by NGOs

is the reduction of the number of installments by Grameen, and flexibility of repayment from

a weekly to a monthly-basis by BRAC. This way rural areas have been flourishing credit market

for microcredit NGOs, which integrate poor women into formal credit practices for poverty

alleviation and empowerment of this sections of society fostering neoliberalism at grassroots

level in Bangladesh by self-regulating markets and infusing risk taking norms into the clients

of the programs.

While “empowerment” in the neoliberal development paradigm has commonly been a stated

objective of microcredit programs along with poverty alleviation, and integrating the poor into

developmental intervention programs like microcredit has been a useful strategy for bringing

women out of the family precinct, much more needs to be done if they are to fully realize their

individual and collective potentials. For example, while women’s mobility in the arena of

society has been increased to a significant level due to involvement in microcredit programs

through regular visit in local loan center, but their traditional perception with regard to different

issues related to their life-chances has not changed to a level that could significantly contribute

to their empowerment.

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Most women have been unable to develop their economic, social and political agency due to

their lack of full involvement in income-generating activities. Given the social and cultural

background of the traditional social structure, most of the family decision-making still lies with

male members of the family; female participation appears to be limited. Women’s freedom and

autonomy is also limited because women are culturally taught to be loyal to their husbands or

other male elders in the family. Microcredit programs have been unable to overcome these

strong sociocultural and traditional values. Microcredit programs in this case could not bring

about an ideational change among the women with regard to their life choices through regular

center-meetings and other educational and awareness-raising programs. One of the possible

reasons lies behind the fact that women simply borrow and repay the loans, but the use and

control of loan money remains with the husband. Women are not in control of credit, which

therefore limits their scope to exercise and exert power in the arena of household and related

affairs. As women bear the risk and repay the loan, they undergo serious stress which affects

their personal and family wellbeing.

The majority of the women are pressurized by their husbands to take loans despite repayment

responsibilities lying solely with the wife. Domestic violence is prevalent in the context of rural

Bangladesh, and is primarily perpetrated against women. Microcredit and its operational

practices have not been able to bring about a change in perception about domestic violence

among people through raising awareness. Rather the situation of violence against women has

been exacerbated due to women’s involvement in credit programs. Where violence against

women was in the past an occasional occurrence, after joining credit programs the incidences

have become more regular due to disputes over loan-repayments. The study also indicates that

dire economic conditions experienced by poor families results in conflicts, and women’s

involvement in microcredit activities have, to some extent, intensified negative gender attitudes

and in the forms of physical and psychological violence instead of decreasing the level and

frequency of the incidence. Therefore, microcredit may contribute to an escalation of gender

violence (Rahman, 1999). Some factors include the lack of control over loan-money use on the

part of women, absence of self-employment, over-regulation by NGOs, and the patriarchal

attitudes embedded in the structure of society. Many women still cannot visit public places

alone due to strict social norms, since violating the norms of patriarchal social structure

contributes to negative sanction for the women.

Moreover, microcredit has created a new dimension in marital relationships with a negative

twist. NGOs for the sake of guaranteeing the economic security of the programs urge clients to

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save money in a secret fund, creating a culture of wives lying to their husbands. This is not

befitting behavior in the context of Bangladesh, and this ultimately downgrades the status of

women, escalating the violence against wife. The study reveals that microcredit contributes to

fostering the dowry system in rural society, because poor women often use credit as a form of

dowry in order to negotiate with the husbands. Consequently, women cannot raise their status

in the family and in broader society due to the misuse of credit. Therefore, NGO microcredit

interventions have not been able to successfully challenge the century-old practices of dowry.

Rather, poor women regard credit as a convenient means for overcoming family conflicts by

offering dowry (with microcredit money) to the bridegroom, instead of using it for their own

self-improvement and empowerment.

Women are instrumental to the successful operation and management of NGO-microcredit

initiatives. Therefore, the empowerment of women remains mere development rhetoric and is

not likely to be achieved within a short period of time, because in a traditional society like

Bangladesh “social change occurs slowly and radical social change is disruptive” (Bernasek,

2003: 381). Besides, microcredit programs have been unable to challenge the traditional

patriarchal social structure, and NGOs have not been willing to initiate awareness drives or

campaigns that might bring about a change in the existing system of patriarchy. It can be argued

that through the operation and management of the programs according to economic rationality,

NGOs have successfully brought women into the arena of the financial market and constructed

them as economic agents, which dovetails perfectly with neoliberal ideas of “the

entrepreneurial, individual citizen and the privatization of citizenship” (Lazar, 2004: 3).

Microcredit as a neoliberal development strategy has therefore expanded the field of market

for the new clienteles who once had been out of this domain, where women are the best agents

of channeling credit in market rationality and expanding the microcredit market even in the

untapped rural areas in Bangladesh by enmeshing poor women into formal credit practices

through the development rhetoric of poverty alleviation and empowerment agenda.

Some poor women in the upper- and middle-income ceiling have been able to reduce the level

of their food poverty following successful integration and participation in microcredit

initiatives, but the situation is more critical for the lower-income group given that they do not

derive regular economic returns from the projects in which they have made their investments,

and the majority of them have misused the credit. Both the middle- and lower-income groups

tend to fall into vulnerability due to the lack of regular income earning activities and capacity

to save. Therefore, microcredit is found to have minimal effects on the alleviation poverty of

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certain groups of poor women. Credit has become a coping strategy for a large section of poor

women as it has replaced the informal money lending business, while reinforcing that very

same system due to the severe strains of repayment. Therefore, microcredit has emerged as the

new economy in the rural social structure.

Credit borrowed by the poor women has also not been properly utilized by clients for income-

generating activities. Therefore, the misuse of credit by clients has not yielded any remarkable

social and economic outcomes for a majority of the poor households. At the same time, most

of the borrowers have invested credit in low-return enterprises, which further reduces the

efficacy of poverty alleviation touted by NGO microcredit programs. The experiences of poor

women suggest that there is a sheer lack of supervision by the NGOs over the kind of activities

or enterprises that the loan-money is used. NGOs are seen to simply offer and recover loan

from poor clients independent of whether it is used for productive activities. Microcredit NGOs

like Grameen Bank and BRAC in Bangladesh seem to have claimed their successes on the

basis of a high repayment rate and the sustainability of the programs. However, the real impact

on the participants has not been adequately prioritized. (Ali & Hatta, 2012).

The general overview reveals that the effects of credit on poor women is more pronounced for

the group of women who already possess their own asset base, financial backup, or income-

earning persons in the family. The presence of these factors increases the shock bearing

capacity of the family during crisis situations. In the majority of cases, poor women use the

loan money for meeting consumption and immediate household needs instead of income-

generating activities, and therefore are unable to alleviate their economic vulnerabilities. In

some cases, the existing poverty has been exacerbated due to the strain of installment-

repayments, which forces clients to engage in cross-borrowing. Moreover, poor clients

typically do not possess the necessary education and skills to run any potential businesses that

require capital, technical knowledge and competence, which leads to even greater potential for

subsequent vulnerability.

Credit in many instances has become a burden and risk to a majority of poor households owing

to repayment pressures. Therefore, microcredit has minimal effect on the alleviation of poverty

and the reduction of vulnerability for poor credit clients given the socioeconomic contexts of

the rural social structure in which they continue to live their lives. Besides ‘to govern too much’

(Foucault, 2008) is not likely to furnish the optimal outcomes for poor credit-clients. Since

neoliberalism seeks to expand existing markets and create new ones beyond traditional bounds

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(Connell, 2014), based on the operational design and management structure of NGOs, it can be

argued that microcredit is a political strategy of neoliberalism, which masquerades under the

banner of financial inclusion and integration of poor women.

Although in certain specific cases there exists evidence that microcredit has directly

contributed to the reduction of poverty and mitigated the vulnerability of poor rural women,

this only occurs when women are clearly grouped into categories in order to offer appropriate

loans according to their ability and means to make repayments. Women’s participation in such

NGO initiatives has been said to have given them new hope, better prospects, new thinking,

and a better future; unfortunately microcredit programs has not engendered remarkable

outcomes for a majority of clients due to the management mechanism of the organizations and

its methods of loan-recovery.

Poverty is most often seen as a local institutional problem, while poverty alleviation is a “local

institutional process” (Batiaensen et al., 2005:979), which means that how an organization

develops the structure and design of the programs is crucial in determining whether the

program produces positive or negative outcomes. Institutional processes, can contribute

remarkably to the alleviation of poverty through the appropriate utilization of the skills and

knowledge from the target population. For example, poor women’s indigenous knowledge and

skills should be harnessed for productive purposes, which can play a significant role in the

alleviation of poverty. How exactly local and traditional knowledge and skills can productively

be channeled by engrossing the poor in their own development ought to be a further point of

investigation in order to reap the highest positive outcomes from income generation projects

of microcredit. Moreover, the forced drop out policy of microcredit programs for loan-

defaulters is indicative of the commercial nature and financial motive of the NGOs. Special

programs for the defaulting clients could be incorporated into microcredit programs in order to

guarantee distributive development and gender justice so as to build the base of a just society.

The shortcomings of the operational design and commercial structure of NGO microcredit

programs seem to have outweighed the positive effects of credit on the lives of their clients to

a large extent, which must be given particular attention if the operation of microcredit for the

development of poor people, particularly poor women in rural Bangladesh is to be successful

in the years to come.

241

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Appendix

Interview Checklist

A). Survey Questionnaire

1. Name:

2. Educational qualification

3. Occupation

4. Monthly income (contributed by all earning members)

5. Number of family members

6. Length of involvement in credit programs

7. Total amount of assets (such as land and other assets

B). Interview with the female credit clients

(i) Poverty related questions

Use of money

1. Why and under what circumstances did you join microcredit programs?

2. How long are you involved in microcredit programs? (asked in the survey)

3. How much loan did you receive first?

4. What did you do with this money?

5. What type of activities are you currently doing with loan money?

6. How much money do you earn from these activities per month?

7. Do you get the required profit from these activities and how?

8. Can you further invest your money in expanding your business?

9. Do you think that your income has been increased by undertaking these income

generation activities, and how?

10. Do you use the loan money for the purpose of income generation, if not why?

11. Do you have any savings and how did you save them?

12. How much money do you spend for food per month?

Quality of life

13. What are your daily food intake items?

14. Can you mange everyday meal as per your need?

15. What do you do if the necessary food stock falls short?

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16. What is the pattern of your house? (just observe and note down)

17. How much money do you spend for buying clothing, household items/furniture and

other household materials per annum?

18. Do you have required number of furniture, necessary household items and how do you

buy them?

19. Do you have access to safe drinking water and how do you manage it?

20. Do you have sanitary latrine and do you use soap or any liquid for cleaning your hands

after using toilet or before eating meal?

21. Can you maintain visiting doctors when you fall sick?

22. What type of doctors you usually visit in this case?

23. How much money do you spend for health and medicine per annum?

24. Do your children go to school, if not why?

25. Do you have any other asset that is bought with your income from micro investment?

26. Can you buy things as per your choice as and when needed with your income?

27. How do you tackle if there arises any financial problems?

28. Do you spend loan money for other purposes than investing in business, and why?

(ii) Loan collection and related questions (clients)

1. What do NGO officials do before disbursing the loan?

2. Do you need to pay any mortgage/ security bond to get loan, if not, why do NGO offer

you loan without any collateral?

3. How do you get introduced with the NGO staff for loan and what procedures do NGOs

follow in case for disbursing the loan?

4. Do you face any problems in case of getting loan?

5. In what way do you pay the installments, and how do you manage initial installment if

the repayment begins immediately after the disbursement of loan?

6. Do you face any difficulties to pay the installments, if yes what problems?

7. What do you do if you become default in paying the loan in due time?

8. What measures do NGO workers take for the collection of loans?

9. How do you deal with the NGO staff if you fail to meet the repayment deadline, and

how you tackle the situation?

10. What measures do NGO officials take if you fail to pay the installment in time?

11. Can you take loan individually, if not why, and what strategy do you follow in this

regard?

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12. Who bears the responsibility if one member of the group fails to pay the installment

and what happens in this case for that member if you collect loan in a group?

13. What rules and regulations do you follow in the repayment of loan?

14. What disciplinary regulation (terms and conditions) do NGO impose upon the clients

for the collection and disbursement of loan?

15. Do you collect loan from more than one NGO or any other money lenders, and why?

16. How do you maintain the repayment in case of borrowing loan from more than one

NGOs or from other sources?

17. Why don’t you collect loan from other commercial bank?

18. Do NGO officials monitor your business or any other activities driven by microcredit

programs, why and why not?

19. Do NGO officials arrange any meeting for you and do you need to attend the meeting?

20. What do they teach in the meeting?

21. What do you do in the meeting?

22. Why are some clients dropped out from programs if they fails to repay the loan in time?

23. Do you know how much interest you have to pay against your loan and how to calculate

it?

24. Do you know how much interest is given against your savings and DPS?

(iii) Social Capital related questions (clients)

1. How do you borrow loan?

2. Why and how do you form group to get loan from NGO?

3. Why don’t NGO offer loan individually?

4. Do you have any problem to collect loan in a group?

5. Did you know each and every member of the group before joining credit program?

6. How and why do you maintain communication with other group members?

7. Do you have trusting relation with each and every member of the group, if not why?

8. Do you think that your social relation has been solidified or eroded due to joining the

group lending programs?

9. What do you do when any group member fails to repay the installment in time?

10. Do you have any dispute among yourselves if any one of the group member fails to

repay the loan in time?

11. What is the function of a group and how does NGO use your group network, and why?

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12. Do NGOs give equal priority to all clients in the group in terms of offering loan, if not

why?

13. Do you think that every member of the group benefits equally from joining this

program?

14. What type of members is given more priority in the case of allocating loan?

15. Do you have to go to the center to pay the loan in person?

(iv.) Empowerment related questions (clients)

1. What do you understand by empowerment?

2. What does it need to increase power of women?

3. Who takes decision in your family affair?

4. Who, in your opinion, should take decision in all family affairs?

5. In what family affairs can you take decision?

6. Do you have any freedom in the family about making choices?

7. Who asked you to borrow loan?

8. How do you use the loan?

9. Who controls loan and why?

10. Do you use loan money by yourself, if not why?

11. Who pays back the installment of loan and how?

12. Do you encounter any problems in the family while paying back the installment of loan?

13. Do you have any problems with your husband or any other male members of the family

over the use and control of money?

14. How do your family member and other people in the community see your participation

the microcredit programs?

15. Do you think that your position in the family and society has been improved due to

participation in microcredit project, and how?

16. How do you visit NGO office?

17. Can you visit any public place alone, if not why?

18. Can you buy anything as per your choice?

19. Do you face any problems in your family when you join credit programs and collect

loan from NGO?

20. How do you maintain the repayment conditions of the NGOs and what happens if you

fail to meet them?

21. Did you face any social problems while borrowing loan from NGOs?

279

22. Do you think that your involvement in credit program has expanded you freedom with

regard to your choice, voice and movement in the society?

23. What is the name of chairman of your Union?

24. Do you cast vote in local council and national election?

25. Can you cast vote for the candidate of your choice, if not why?

26. Do you participate in any arbitration meeting in your community?

v). Credit Clients (some general questions)

1. Why do NGOs offer loan to women instead of men despite knowing that men use the

loan? What is your view?

2. Why don’t you take loan from local money lenders instead of NGOs as you face

problems while repaying the installments in short payment date?

3. What NGO officials do when they can learn you are borrowing loan from other NGOs?

4. Can you take more than one loan in different names from the same NGO, if not why?

5. If you have several options to borrow money, say commercial Bank, NGOs and local

money lenders, which one you would prefer to serve your purpose, and why?

6. Do you think that NGOs by microcredit can alleviate poverty to an optimum level, how

it could be possible, and if not why?

7. Do you think that your relationships with other neighbors and also with the NGO

officials have been improved or aggravated due to joining the credit programs?

8. How do other group members in the neighborhood consider if you eat good food and

invite guest, though you cannot pay the loan in due time ?

9. Can you leave your place before the day of repayment without informing the center

chief or group leader, if not why?

10. Why do you pressure other women in the group for the repayment in time?

11. Do you share any good information regarding any important issue beneficial for life to

other women in your group and even in the community, how and if not why?

12. What could be better for you to achieve economic goal and other benefits from

microcredit?

13. How do you negotiate any conflict if you have with the people in the neighborhood?

Who interferes in solving this issue?

14. What NGOs do for raising awareness among you about social, political issues and

involvement in local politics?

15. Do NGOs take any legal actions against any clients being loan default?

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D). Interview with the NGO staff (Just local field officers)

(i) Social capital and loan management related questions

1. How long do you operate the programs in the village?

2. What is the name of your office according to location and rank of officer?

3. What do you do before entering the village with credit programs?

4. Do you face any problems with the locals during the operation of the programs?

5. How do you offer credit to poor women?

6. What is the institutional terms and conditions that poor women have to abide by to get

and repay the loan?

7. Why do you construct women group for the disbursement of credit?

8. What is the function of a group or group leader?

9. Who bears the responsibility of the group?

10. Why and how do you select center chief? How long does her tenure last?

11. Do you offer training to center chief and why?

12. What is taught in the meeting?

13. What necessary steps do you take if any clients fail to repay the loan lime in time?

14. How do you ensure the highest repayment in time and why?

15. How do you monitor credit clients for the security of loan?

16. Do you offer any loan to individual women without any collateral?

17. How do you maintain the regular collection of loan from the poor clients?

18. What disciplinary mechanism do you apply for the defaults clients and how?

19. What steps do you take if any client repeatedly fails to repay the installment of loan?

20. How do you check and retain the drop out clients and do you have any provision for

retaining them in the program?

21. Do you take disciplinary action against the default clients and do you take any legal

steps for the recovery of loan?

22. What is your accountability to the higher authority, and how do you manage the senior

authority if you fail to ensure the set target of recovery?

23. How do NGO authorities control and oversee the field staff who are dealing with

financial matters with the clients?

24. What are the criteria for the selection of women as credit clients?

25. Do you have any provision to offer loan to more than one member of the same family?

281

26. Which groups of poor women do you identify and select as the credit clients?

27. Do you have any monitoring and evaluation system to manage the income generation

activities run by the poor women?

28. What technical cooperation do you provide for the operation and management of loan-

driven activities by women?

29. What do you do if you can know that the clients have not used the loan for income

generation project, and simultaneously borrow from loan from other NGOs?

30. What does basic difference lies between the commercial credit and NGO-promoted

credit? What is your opinion in this regard?

31. How do you compete when several NGOs operate microcredit programs in the same

village? How do you control the clients if they leave the village without paying the

loan?

32. Why does the group break and what measures you take to check the breaking of the

group?

33. What do you do for building trust among the poor clients for their development and

which way do you do it?

34. Do you offer any programs for raising social and political awareness among the poor

clients?

35. How do you ensure the repayment of the first installment of a new client?

36. Do you offer any incidental or any other consumption loan?

37. Do you apply any service charge for the allocation of loan, if yes, how much and why?

38. How much is the interest rate for the loan? Do you pay interest against savings and

DPS of the clients and how much?

39. Do you keep savings and DPS books and why?

40. Why and how do you bring the new areas under coverage of microcredit?

Thank you very much for your cooperation

A. Sixteen Decisions of Grameen Bank

1. The four principles of Grameen Bank: Discipline, Unity, Courage, and Hard work: we

shall follow and advance in all walks of our lives.

2. We shall bring prosperity to our families.

3. We shall not live in dilapidated house. We shall repair our houses and work towards

constructing new houses at the earliest.

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4. We shall grow vegetables all the year round. We shall eat plenty of them and sell the

surplus.

5. During the planting seasons, we shall plant as many seedlings as possible.

6. We shall plan to keep our families small. We shall minimize our expenditures. We shall

look after our health.

7. We shall educate our children and ensure that they can earn to pay for their education.

8. We shall always keep our children and environment clean.

9. We shall build and use pit-latrines.

10. We shall drink water from tube wells. If it is not available, we shall boil water or use

alum.

11. We shall not take any dowry at our son’s weddings, neither we given any dowry at our

daughter’s weddings. We shall keep the center free from the curse of dowry. We shall

not practice child marriage.

12. We shall not inflict any injustice on anyone; neither shall we allow anyone to do so.

13. We shall collectively undertake bigger investments for higher incomes.

14. We shall always be ready to help each other. If anyone is in difficulty, we shall all help

him or her.

15. If we come to know of any breach of discipline in any center, we shall all go there and

help restore discipline.

16. We shall take part in all social activities collectively.

B. Eighteen Promises of BRAC

1. We will not adopt corrupt or unlawful means.

2. We will work hard and improve our conditions.

3. We will educate our children.

4. We will adopt family planning measures and have a small family.

5. We will keep ourselves, homes and surroundings clean.

6. We will always drink potable water.

7. We will always cover our food and wash our hands before eating.

8. We will build sanitary latrines & stop indiscriminate defecation.

9. We will cultivate vegetables around out homesteads and plant trees.

10. We will always help others.

11. We will fight against polygamy and violence towards women.

12. We will be loyal to our Village Organizations and obey its rules and regulations.

13. We shall not sign anything without full understanding what is written.

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14. We will attend the weekly and monthly meetings punctually.

15. We will obey the decisions of our Village Organizations.

16. We will deposit our weekly savings regularly.

17. We will repay all loans in time.

18. We will give equal opportunities to girls as well as boys.

Source: Matsui, N. and Tsuboi, H. (2015) “Microcredit, Inclusive Finance and Solidarity”, in

Matsui, N. and Ikemto, Y. (eds.) Solidary Economy and Social Business, Spring briefs in

Economics.

List of Interviewees

Grameen Bank (Chatal) BRAC (Kazirgaon)

Center -01 Center-02 Center-01 Center-02

Name (Pseudo/Real) Name (Pseudo/Real) Name (Pseudo/Real) Name (Pseudo/Real)

01. Khadiza (P) 01. Shimul (R) 01. Amirun (R) 01. Mayarun (R)

02. Nazma Begum (P) 02. Piara (P) 02. Piara (R) 02. Swapna (P)

03. Kohirunnesa (P) 03. Asmatun (R) 03. Jamirun (P) 03. Nazma (P)

04. Rahima (R) 04. Abida Begum (R) 04. Ful Banu (R) 04. Howa (P)

05. Gulecha Begum (R) 05. Nehar Begum (R) 05. Khatun (P) 05. Nilufa (P)

06. Tanjina (R) 06. Jhumera (R) 06. Achiya (R) 06. Shehela (P)

07. Farzana (P) 07. Dilara (R) 07. Shiri Begum (R) 07. Romena (P)

08. Rayhana (R) 08. Lal Bibi (R) 08. Mina Begum (R) 08. Papiya (P)

09. Sureza (R) 09. Pairun (R) 09. Nazma (R) 09. Maleka (P)

10. Mayarun Begum (R) 10. Hena Begum (R) 10. Mina Begum (R) 10 Khodeza (P)

11. Khatibunnes (R) 11. Tania (R) 11. Nazma (P) 11. Parul Akhter (P)

12. Achiya Khatun (R) 12. Shilpi (R) 12. Nehar Begum (R) 12. Nasrin (P)

13. Sufia (R)